<PAGE>
===============================================================================
 
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ----------------------
 

                                   FORM 10-Q

(Mark One)

  [x]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

                        SECURITIES EXCHANGE ACT OF 1934

                 For the quarterly period ended March 31, 1997


                                 OR


  [_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

                        SECURITIES EXCHANGE ACT OF 1934

            For the transition period from ____________to_______________

                         Commission file number 0-28292

                             ------------------------

                             BANK PLUS CORPORATION
                 (Exact name of Registrant as specified in its
                                   charter)

               Delaware                          95-4571410
 (State or other jurisdiction of        (I.R.S. Employer Identification Number)
incorporation or organization)

 4565 Colorado Boulevard                            90039
 Los Angeles, California                          (Zip Code)

(Address of principal executive office)

      Registrant's telephone number, including area code:  (818) 241-6215

                                    ---------------- 

  Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes    x      No  __
                                                 ----           

  As of April 30, 1997, Registrant had outstanding 18,247,765 shares of Common
Stock, par value $.01 per share.
==============================================================================
<PAGE>
 
                             BANK PLUS CORPORATION



                                     INDEX

<TABLE>
<CAPTION>
 
 
                                                                                                            PAGE
                                                                                                            ----
<S>          <C>                                                                                            <C>
PART I.      FINANCIAL INFORMATION

Item 1.      Financial Statements
 
             Consolidated Statements of Financial Condition  as of March 31, 1997                              
             and December 31, 1996........................................................................     1           
                                                                          
             Consolidated Statements of Operations for the three months ended                       
             March 31, 1997 and 1996......................................................................     2                   
                                                                          
             Consolidated Statements of Cash Flows for the three months ended                       
             March 31, 1997 and 1996......................................................................     3                   
                                                                          
             Notes to Consolidated Financial Statements...................................................     5
                                                                          
Item 2.      Management's Discussion and Analysis of Financial Condition and Results of                           
             Operations...................................................................................     6            
                                                                          
PART II.     OTHER INFORMATION                                            
                                                                          
Item 1.      Legal Proceedings............................................................................    25
                                                                          
Item 2.      Changes in Securities........................................................................    27
                                                                          
Item 3.      Defaults Upon Senior Securities..............................................................    27
                                                                          
Item 4.      Submission of Matters to a Vote of Security Holders..........................................    27               
                                                                          
Item 5.      Other Information............................................................................    27
                                                                          
Item 6.      Exhibits and Reports on Form 8-K.............................................................    28
                                                                          
             a. Exhibits..................................................................................    28
                                                                          
             b. Reports on Form 8-K.......................................................................    30
 
</TABLE>
<PAGE>
 
                         PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                    BANK PLUS CORPORATION AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
               (Dollars in thousands, except per share amounts)
 
<TABLE>
<CAPTION>
                                             MARCH 31,     DECEMBER 31,
                                               1997           1996
                                           ------------   -------------
<S>                                         <C>            <C> 
ASSETS:
  Cash and cash equivalents                 $  103,871      $   70,126
  Due from brokers........................          --          31,614
  Investment securities available for          
   sale, at fair value....................     154,769         156,251
  Investment securities held to maturity  
   at amortized cost (market value of            
   $5,239 and $5,198 at March 31, 1997    
   and December 31, 1996, respectively)...       5,255           5,178
  Mortgage-backed securities held for           
   trading................................      10,866          14,121
  Mortgage-backed securities available         
   for sale, at fair value................     195,143         179,403
  Mortgage-backed securities held to      
   maturity, at amortized cost (market         
   value of $25,103 and $27,169 at        
   March 31, 1997 and                     
   December 31, 1996, respectively).......      29,255          30,024
  Loans receivable, net of allowances of  
   $52,882 and $57,508 at March 31, 1997     
   and December 31, 1996,  respectively...   2,642,217       2,691,931
  Interest receivable.....................      19,570          20,201
  Investment in Federal Home Loan Bank          
   ("FHLB") stock.........................      53,176          52,330
  Real estate owned, net..................      23,640          24,663
  Premises and equipment, net.............      30,881          31,372
  Other assets............................      26,004          23,076
                                            ----------      ----------
                                            $3,294,647      $3,330,290
                                            ==========      ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
 Liabilities:
  Deposits................................  $2,516,991      $2,495,933
  FHLB advances...........................     387,151         449,851
  Commercial paper........................      40,000          40,000
  Mortgage-backed notes...................     100,000         100,000
  Other liabilities.......................      36,762          31,099
                                            ----------      ----------
                                             3,080,904       3,116,883
                                            ----------      ----------
 Minority Interest:  Preferred stock of                                 
  consolidated subsidiary.................      51,750          51,750 
 Stockholders' equity:
  Common Stock:
   Common stock, par value $.01 per share;
    78,500,000 shares authorized;                  
    18,245,265 shares outstanding at March
    31, 1997 and December 31, 1996........         182             182 
  Paid-in capital.........................     261,902         261,902
  Unrealized (losses) gains on securities.      (2,836)          1,043
  Accumulated deficit.....................     (97,255)       (101,470)
                                            ----------      ----------
                                               161,993         161,657
                                            ----------      ----------
                                            $3,294,647      $3,330,290
                                            ==========      ==========
 
</TABLE>
                See notes to consolidated financial statements.

                                       1
<PAGE>
 
                    BANK PLUS CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
               (Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
                                               THREE MONTHS ENDED
                                                    MARCH 31,
                                           ---------------------------
                                               1997           1996
                                           ------------   ------------
<S>                                        <C>            <C> 
INTEREST INCOME:
 Loans...................................  $     49,840   $     56,180
 Mortgage-backed securities..............         4,304            504
 Investment securities and other.........         4,563          3,368
                                            -----------    -----------
   Total interest income.................        58,707         60,052
                                            -----------    -----------
INTEREST EXPENSE:
 Deposits................................        29,140         31,033
 FHLB advances...........................         5,943          3,667
 Other borrowings........................         3,267          3,514
                                            -----------    -----------
   Total interest expense................        38,350         38,214
                                            -----------    -----------
NET INTEREST INCOME......................        20,357         21,838
 Provision for estimated loan losses.....         4,251          3,905
                                            -----------    -----------
NET INTEREST INCOME AFTER PROVISION FOR
 ESTIMATED LOAN LOSSES...................        16,106         17,933
                                            -----------    -----------
NONINTEREST INCOME (EXPENSE):
 Loan fee income.........................           508            814
 Gains on loan sales, net................             7             --
 Fee income from sale of
  uninsured investment products..........         1,513          1,199
 Fee income on deposits and
  other income...........................           750            790
 Gains (losses) on securities and
  trading activities, net................         1,221            (83)
                                            -----------    ------------
                                                  3,999          2,720
                                            -----------    -----------
 Provision for estimated real estate
  losses.................................          (742)          (668)
 Direct costs of real estate
  operations, net........................        (1,559)        (1,787)
                                            ------------   ------------
                                                 (2,301)        (2,455)
   Total noninterest income..............   ------------   ------------
                                                  1,698            265
                                            -----------    -----------
OPERATING EXPENSE:
 Personnel and benefits..................         6,701          6,973
 Occupancy...............................         2,500          2,717
 FDIC insurance..........................           494          2,031
 Professional services...................         2,620          2,503
 Office-related expenses.................           848          1,086
 Other...................................         1,173          1,317
                                            -----------    -----------
   Total operating expense...............        14,336         16,627
                                            -----------    -----------
EARNINGS BEFORE INCOME TAXES AND
 MINORITY INTEREST IN SUBSIDIARY.........         3,468          1,571

 Income tax (benefit) expense............        (2,300)            40
                                            ------------    ----------
EARNINGS BEFORE MINORITY INTEREST IN
 SUBSIDIARY..............................         5,768          1,531
 Minority interest in subsidiary
  (dividends on subsidiary
   preferred stock)......................         1,553             --
                                            -----------     ----------
NET EARNINGS.............................         4,215          1,531
 Preferred stock dividends...............            --          1,553
                                            -----------    -----------
EARNINGS (LOSS) AVAILABLE FOR COMMON.....   $     4,215    $       (22)
 STOCKHOLDERS............................   ===========    ============
EARNINGS PER COMMON SHARE................         $0.23    $        --
                                            ===========    ===========
WEIGHTED AVERAGE COMMON SHARES
 OUTSTANDING.............................    18,245,265     18,242,465
                                            ===========    =========== 
</TABLE>   
                See notes to consolidated financial statements

                                       2
<PAGE>
 
                    BANK PLUS CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (Dollars in thousands)
<TABLE>
<CAPTION>

                                                 THREE MONTHS ENDED
                                                     MARCH 31,
                                              ------------------------
                                                  1997          1996
                                              -----------   ----------
<S>                                           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net earnings...............................  $     4,215   $    1,531
 Adjustments to reconcile net
  earnings to net cash provided
  by (used in) operating
  activities:
   Provisions for estimated loan
    and real estate losses..................        4,993        4,573
   (Gains) losses on sale of
    loans and securities....................       (1,228)          83
   Amortization of deferred
    items, net..............................         (491)        (441)
   FHLB stock dividend......................         (891)        (649)
   Depreciation and amortization............          870          978
 Purchases of mortgage-backed
  securities ("MBS") held for
  trading...................................       (9,979)          --
 Principal repayments of MBS
  held for trading..........................          157           --
 Proceeds from sales of MBS
  held for trading..........................       13,074           --
 Interest receivable decrease
  (increase)................................          631         (921)
 Other assets decrease
  (increase)................................       31,300       (5,180)
 Deferred income tax benefit................       (2,404)          --
 Interest payable increase..................        4,621        1,598
 Other liabilities increase.................        1,292        1,724
                                                ---------    ---------
   Net cash provided by
    operating activities....................       46,160        3,296
                                                ---------    ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchases of investment securities
  available for sale........................           --      (67,575)
 Purchases of MBS available for sale........      (66,547)          --
 Principal repayments of MBS
  available for sale........................        5,622        1,907
 Proceeds from sales of MBS available
  for sale..................................       43,695           --
 Principal repayments of MBS held to
  maturity..................................           77           --
 Loans receivable decrease..................       34,727       44,554
 Net proceeds from sales of  real
  estate, net...............................       11,331        3,944
 Premises and equipment (additions)
  dispositions, net.........................         (371)         236
                                                ----------   ---------
   Net cash provided by (used
    in) investing activities................       29,227      (16,934)
                                                ---------    ----------
Cash Flows from financing Activities:
 Demand deposits and passbook
  savings, net increase (decrease)..........        6,336      (66,853)
 Certificate accounts, net increase.........       14,722       45,047
 Payments of preferred stock dividend.......           --       (1,553)
 Proceeds from FHLB advances................       50,000           --
 Repayments of FHLB advances................     (112,700)     (60,000)
 Short-term borrowings increase.............           --       59,900
                                                ---------    ---------
   Net cash used in financing
    activities..............................      (41,642)     (23,459)
     Net increase (decrease) in.............    ----------   ----------
      cash and cash equivalents.............       33,745      (37,097)
   Cash and cash equivalents at the
    beginning of the period.................       70,126       94,794
                                               ----------    ---------

CASH AND CASH EQUIVALENTS AT END OF PERIOD..  $   103,871   $   57,697
                                               ==========    =========

</TABLE>
                         (Continued on following page)

                                       3
<PAGE>
 
                    BANK PLUS CORPORATION AND SUBSIDIARIES

              CONSOLIDATED STATEMENTS OF CASH FLOWS--(Continued)
                            (Dollars in thousands)
<TABLE>
<CAPTION>
 
                                                THREE MONTHS ENDED
                                                     MARCH 31,
                                            --------------------------
                                               1997           1996
                                            -----------    -----------
<S>                                         <C>            <C>
SUPPLEMENTAL CASH FLOW INFORMATION:
 Cash (paid) received during the period
  for:

   Interest on deposits, advances
    and other borrowings.................   $   (33,147)   $   (35,939)
   Income tax refund.....................            --            383

SUPPLEMENTAL SCHEDULE OF NONCASH
 INVESTING AND FINANCING ACTIVITIES:
 Additions to real estate
  acquired through foreclosure...........        12,666          8,874
 Loans originated to finance
  sale of real estate owned..............         1,616            250

</TABLE>



                See notes to consolidated financial statements.

                                       4
<PAGE>
 
                    BANK PLUS CORPORATION AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       Three Months Ended March 31, 1997

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   Principles of Consolidation

     In the opinion of Bank Plus Corporation ("Bank Plus") and Bank Plus
together with its subsidiaries (the "Company"), the accompanying unaudited
consolidated financial statements, prepared from the Company's books and
records, contain all adjustments (consisting of only normal recurring accruals)
necessary for a fair presentation of the Company's financial condition as of
March 31, 1997 and December 31, 1996, and the results of operations and
statements of cash flows for the three months ended March 31, 1997 and 1996.

     Bank Plus is the holding company for Fidelity Federal Bank, a Federal
Savings Bank, and its subsidiaries (the "Bank" or "Fidelity") and Gateway
Investment Services, Inc. ("Gateway"). The Company's headquarters are in Los
Angeles, California. The Company offers a broad range of consumer financial
services, including demand and term deposits, uninsured investment products, and
loans to consumers, through 33 full-service branches, all of which are located
in Southern California, principally in Los Angeles and Orange counties. All
significant intercompany transactions and balances have been eliminated. Certain
reclassifications have been made to prior years' consolidated financial
statements to conform to the 1997 presentation.

     In May 1996, the Bank completed a reorganization pursuant to which all of
the outstanding Class A Common Stock of Fidelity was converted on a one-for-one
basis into all of the outstanding common stock of Bank Plus and Bank Plus became
the holding company for Fidelity (the "Reorganization"). Bank Plus currently
has no significant business or operations other than serving as the holding
company for Fidelity and Gateway, which prior to the Reorganization was a
subsidiary of the Bank. All references to "Fidelity" prior to the
Reorganization include Gateway.

     On February 9, 1996, the Bank's stockholders approved a one-for-four
reverse stock split (the "Reverse Stock Split") of the issued and outstanding
shares of the Bank's Common Stock. Upon effectiveness of the Reverse Stock
Split, each stockholder became the owner of one share of Common Stock for each
four shares of Common Stock held at the time of the Reverse Stock Split and
became entitled to receive cash in lieu of any fractional shares. All per share
data and weighted average common shares outstanding have been retroactively
adjusted to reflect the Reverse Stock Split.

     The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and include all
information and footnotes required for interim financial statement presentation.
The financial information provided herein, including the information under the
heading Item 2. "Management's Discussion and Analysis of Financial Condition and
Results of Operations" ("MD&A"), is written with the presumption that the users
of the interim financial statements have read, or have access to, the most
recent Annual Report on Form 10-K which contains the latest available audited
consolidated financial statements and notes thereto, as of December 31, 1996,
together with the MD&A as of such date.

Supplementary Earnings/Loss per Share Data

     Net earnings/loss per common share for the three months ended March 31,
1997 and March 31, 1996, as adjusted to reflect the dividends on preferred stock
of subsidiary, was determined based on 18,245,265 and 18,242,465 shares
outstanding, respectively. Common stock equivalents for the three months ended
March 31, 1997 and 1996 did not impact the calculation of net earnings/loss per
share.

                                       5
<PAGE>
 
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS


OVERVIEW

  Bank Plus, through Fidelity, operates 33 full-service branches, all of which
are located in Southern California, principally in Los Angeles and Orange
Counties. The Company offers a broad range of consumer financial
servicesincluding demand and term deposits and loans to consumers. The Bank
closed its wholesale correspondent single family origination network and its
multifamily origination operations in the third quarter of 1994 due to the
economic and competitive environments. Since that time the Bank has entered into
strategic partnerships with established providers of consumer credit products
pursuant to which all consumer credit products made available to the Bank's
customers are referred to and underwritten, funded and serviced by the strategic
partners. In addition, through Gateway, a National Association of Securities
Dealers, Inc. ("NASD") registered broker/dealer, the Company provides customers
with uninsured investment products, including anumber of mutual funds, annuities
and unit investment trusts.


RECENT DEVELOPMENTS

 Proposed Exchange Offer

  The Company filed a registration statement with the Securities and Exchange
Commission (the "SEC") on Form S-4 on March 28, 1997 in connection with a
possible exchange offer of up to approximately $51.8 million of the Company's
12% Senior Notes due 2007 ("Senior Notes") for the 12% Noncumulative
Exchangeable Perpetual Preferred Stock, Series A ("Series A Preferred Stock")
issued by Fidelity in 1995. The terms of the Series A Preferred Stock provided
for the making of such an exchange offer. The Company has not commenced such an
exchange offer nor has it set any date for the commencement of such an exchange
offer and there can be no assurance as to the date on which, or whether, the
Company will commence such an exchange offer. Any offer of Senior Notes in
exchange of the Series A Preferred Stock will only be made, if at all, by means
of a prospectus.

 Registration of Common Stock

  The Board of Directors of the Company has approved the filing of a
Registration Statement on Form S-4 (the "Acquisition S-4") of up to
approximately $75.0 million in shares of Bank Plus Common Stock (the
"Acquisition Shares") that may be issued from time to time in the future as
consideration (in whole or in part) for possible future acquisitions. The Board
(or an authorized committee thereof) will negotiate, determine and approve on
behalf of the Company the number of Acquisition Shares to be issued in any
acquisition and the terms and conditions of all agreements to be entered into by
the Company in connection therewith. Offers to sell any of the Acquisition
Shares, if any, will be made only pursuant to the prospectus constituting a part
of the Acquisition S-4.



BUSINESS STRATEGY

  The Company's business strategy is to be a consumer-focused provider of
financial services, by enhancing its franchise to integrate its traditional
services and products (deposit services, checking and savings accounts) with the
offering of investment products through Gateway and consumer credit products
through strategic partners. As a part of such strategy, management continues to
explore new opportunities to expand the integrated sales platform, to increase
fee income growth, and to build upon the use of technology in delivering
financial products and services. In addition, the Company is continuing to focus
on improving the quality of its loan portfolio by reducing the level of problem
assets through aggressive management and increasing operating efficiency by
reducing and maintaining lower levels of operating expenses.

  Fidelity has formed a plan to develop affinity credit card issuance programs
with strategic partners. These programs will include unsecured credit cards and
credit cards secured by real estate or by cash deposits. The Bank has recently
entered into contracts to establish such programs with two separate partners.
Fidelity will serve as issuer and owner of MasterCard credit card accounts and
will develop the card portfolio from prospects

                                       6
<PAGE>
 
provided by the strategic partners. As part of the affinity partner agreements,
the strategic partners will have the right to purchase outstanding receivables
of these accounts at par and, in exchange, will provide credit enhancements to
guarantee full repayment of the Bank's outstanding receivables in the event of
cardholder defaults. The credit enhancements will include the funding of a
reserve account or pledging of collateral as receivables are funded by the Bank.
The Bank has committed to fund up to an aggregate outstanding balance of $425
million under the current programs. Two board members of one of the strategic
partners are also board members of Fidelity.

  Additionally, as a part of its business strategy, the Company plans to
purchase assets (loans and securities) that may exceed $900 million in 1997.
This plan, in general terms, is based upon certain risk adjusted return and
liquidity objectives and is designed to increase the Company's securities and
loan portfolios to enhance the Company's earning capabilities. The proposed
increase in earning assets may be at a lower interest rate spread than the
Company's assets are currently yielding depending on available financing
sources. Accordingly, if the plan is implemented, the Company's interest rate
spread may decline. In conjunction with this plan, the Company continues its
exploration of other asset origination capabilities, customer base expansion and
acquisition opportunities for financial services institutions. If such
opportunities are pursued, they may limit the asset purchase strategy discussed
above to an amount significantly less than $900 million.

 Consumer-Focused Provider of Financial Services

  Management believes that, given the highly competitive nature of the financial
services industry and the regulatory constraints that the Company faces in
competing with unregulated companies, the Company must continue to expand from
its historical business focus and provide customers with a wider array of
products through a variety of delivery channels. The Company is pursuing the use
of various electronic delivery systems, which include an Internet bank, and
software to enhance customer convenience and the Company's fee income
opportunities. The Company is currently negotiating with a provider of
electronic delivery services to begin implementing an Internet bank. The
Internet bank will offer on-line transactional capabilities for selected bank
services with plans to expand to the alternative investment products currently
sold through the Company's integrated sales platform.

 Management of Problem Assets

  During the fourth quarter of 1995, the Bank adopted an Accelerated Asset
Resolution Plan (the "Plan") designed to aggressively dispose of, resolve or
otherwise manage a pool of primarily multifamily loans and real estate owned
("REO") that at that time had higher risk profiles than the remainder of the
Bank's multifamily loan portfolio. The Plan reflected both an acceleration in
estimated timing of asset resolution, as well as a potential change in recovery
method from the normal course of business. See "--Asset Quality--Accelerated
Asset Resolution Plan."

                                       7
<PAGE>
 
 Continued Reduction of Operating Expenses

  During the first quarter of 1997 as compared to the same 1996 period, the
Company reduced quarterly operating expenses by 13.8% which included a reduction
in personnel expenses of 3.9% reflecting a reduction in the quarterly average of
full-time equivalent ("FTEs") employees of 12.2% (from 534 during the first
quarter of 1996 to 469 during the first quarter of 1997).

  While the Company intends to continue to control and, if possible, reduce
operating expenses, a portion of the expense savings experienced in prior
periods will be devoted to certain business initiatives.  The Company also
intends to expend resources as it evaluates and pursues additional funding and
earning asset acquisition opportunities. Furthermore, management does not
believe that additional significant personnel reductions would be appropriate
without significantly increasing operational risks. Accordingly, the levels of
operating expense reductions experienced in prior periods should not be expected
for future periods.


RESULTS OF OPERATIONS

  The Company reported net earnings available to common stockholders of $4.2
million, after minority interest in subsidiary (dividend on subsidiary preferred
stock) of $1.6 million ($0.23 per common share; computed on the basis of
18,245,265 weighted average common shares outstanding) for the three months
ended March 31, 1997.  This compares to net earnings of $1.5 million before
dividends on preferred stock of subsidiary of $1.6 million ($0.00 per common
share after giving effect to the dividends on preferred stock of subsidiary;
computed on the basis of 18,242,465 weighted average common shares outstanding)
for the three months ended March 31, 1996.

  Net earnings for the three months ended March 31, 1997, as compared to the
same period in 1996, reflect: (a) decreased operating expenses of $2.3 million
primarily due to lower Federal Deposit Insurance Corporation ("FDIC") insurance
costs due to the recapitalization of the Savings Association Insurance Fund (the
"SAIF") in 1996 and an upgrade in the Bank's assessment classification, (b)
increased noninterest income of $1.4 million due primarily to gains on sales of
mortgage-backed securities ("MBS") and (c) increased income tax benefit of $2.3
million (see "--Income Taxes"). These favorable changes were partially offset by
(a) increased provision for estimated loan losses of $0.3 million and (b) the
minority interest in subsidiary (dividend on subsidiary preferred stock) of $1.6
million which were reported in 1996 as preferred stock dividends after net
earnings.


NET INTEREST INCOME

  Net interest income is the difference between interest earned on loans, MBS
and investment securities ("interest-earning assets") and interest paid on
savings deposits and borrowings ("interest-bearing liabilities").  For the three
months ended March 31, 1997, net interest income totaled $20.4 million,
decreasing by $1.4 million from $21.8 million for the comparable period in 1996.

  Net interest income is affected by (a) the average volume and repricing
characteristics of the Company's interest-earning assets and interest-bearing
liabilities, (b) the level and volatility of market interest rates, (c) the
level of nonaccruing loans ("NPLs") and (d) the interest rate spread between the
yields earned and the rates paid.

                                       8
<PAGE>
 
  The following table presents the primary determinants of net interest income
for the three months ended March 31, 1997 and 1996:
<TABLE>
<CAPTION>
 
                                                               THREE MONTHS ENDED MARCH 31,
                                           --------------------------------------------------------------------
                                                         1997                                       1996
                                           --------------------------------    --------------------------------
                                             AVERAGE                AVERAGE      AVERAGE                AVERAGE
                                              DAILY                  YIELD/       DAILY                  YIELD/
                                             BALANCE     INTEREST     RATE       BALANCE     INTEREST     RATE
                                           -----------   --------   -------    -----------   --------   ------- 
                                                                  (DOLLARS IN THOUSANDS)
<S>                                        <C>           <C>        <C>        <C>           <C>        <C>
Interest-earning assets:
 Loans ................................     $2,749,569    $49,840      7.25%    $3,004,641    $56,180      7.48%
 MBS ..................................        238,074      4,304      7.23         30,430        504      6.63
 Investment securities.................        227,827      3,672      6.54        147,639      2,720      7.39
 Investment in FHLB stock .............         52,930        891      6.83         49,866        648      5.21
                                            ----------    -------               ----------    -------
      Total interest-earning assets ...      3,268,400     58,707      7.19      3,232,576     60,052      7.43
                                                          -------                             -------
Noninterest-earning assets ............         61,003                              52,017
                                            ----------                          ----------
      Total assets ....................     $3,329,403                          $3,284,593
                                            ==========                          ==========
Interest-bearing liabilities:
 Deposits:
  Demand deposits ......................    $  292,785        788      1.09     $  304,643        755      0.99
  Savings deposits .....................       119,158        928      3.16        154,724        899      2.33
  Time deposits ........................     2,088,103     27,424      5.33      2,116,138     29,379      5.57
                                            ----------    -------               ----------    -------
   Total deposits ......................     2,500,046     29,140      4.73      2,575,505     31,033      4.83
                                            ----------    -------               ----------    -------
 Borrowings ............................       570,957      9,210      6.54        444,591      7,181      6.48
                                            ----------    -------               ----------    -------
   Total interest-bearing liabilities ..     3,071,003     38,350      5.06      3,020,096     38,214      5.08
                                            ----------    -------               ----------    -------
Noninterest-bearing liabilities ........        44,532                              35,973
Preferred stock issued by consolidated                                       
 subsidiary ............................        51,750                              51,750
Stockholders' equity ...................       162,118                             176,774
                                             ---------                          ----------
Total liabilities and equity ...........    $3,329,403                          $3,284,593
                                            ==========                          ==========
Net interest income; interest rate                       
 spread ................................                  $20,357      2.13%                  $21,838      2.35%
                                                          =======      ====                   =======      ====
Net yield on interest-earning assets
 ("net interest margin") ...............                               2.44%                               2.68%
                                                                       ====                                ====
Average nonaccruing loan balance
   included in average loan balance ....    $   61,709                          $   72,325
                                            ==========                          ==========
Net delinquent interest reserve removed
   from interest income ................                  $ 1,581                             $ 1,691
                                                          =======                             =======
Reduction in net yield on
 interest-earning assets due to             
 delinquent interest ...................                               0.19%                               0.21%
                                                                       ====                                ====
 
</TABLE>

                                       9
<PAGE>
 
  The following tables present the dollar amount of changes in interest income
and expense for each major component of interest-earning assets and interest-
bearing liabilities and the amount of change attributable to changes in average
balances and average rates for the periods indicated. Because of numerous
changes in both balances and rates, it is difficult to allocate precisely the
effects thereof. For purposes of these tables, the change due to volume is
initially calculated as the change in average balance multiplied by the average
rate during the prior period and the change due to rate is calculated as the
change in average rate multiplied by the average volume during the prior period.
Any change that remains after such calculations is allocated proportionately to
changes in volume and changes in rates.

<TABLE>
<CAPTION>
 
                                        THREE MONTHS ENDED MARCH 31, 1997
                                           COMPARED TO MARCH 31, 1996
                                             FAVORABLE (UNFAVORABLE)
                                     ---------------------------------------
                                       VOLUME         RATE           NET
                                     -----------   -----------   -----------
                                             (DOLLARS IN THOUSANDS)
<S>                                      <C>           <C>           <C>
Interest income:
 Loans............................   $   (4,654)   $   (1,686)   $   (6,340)
 Mortgage-backed securities.......        3,750            50         3,800
 Investment securities............        1,304          (352)          952
 Investment in FHLB stock.........           40           203           243
                                     ----------    ----------    ----------
    Total interest income.........          440        (1,785)       (1,345)
                                     ----------    ----------    ----------
 
Interest expense:
 Deposits:
  Demand deposits.................           33           (66)          (33)
  Savings deposits................          237          (266)          (29)
  Time deposits...................          460         1,495         1,955
                                     ----------    ----------    ----------
    Total deposits................          730         1,163         1,893
 Borrowings.......................       (1,713)         (316)       (2,029)
                                     ----------    ----------    ----------
  Total interest expense..........         (983)          847          (136)
                                     ----------    ----------    ----------
Decrease in net interest income...   $     (543)   $     (938)   $   (1,481)
                                     ==========    ==========    ==========
 
</TABLE>

  The $1.4 million decrease in net interest income between the first quarter
1997 and the first quarter 1996 was primarily the result of decreased rates on
average interest-earning assets combined with an increase in the average level
of interest-bearing liabilities.  This was partially offset by an increase in
the level of interest-earning assets and decreased rates on interest-bearing
liabilities.


ASSET/LIABILITY MANAGEMENT

  The objective of interest rate risk management is to maximize the net interest
income of the Company while controlling interest rate risk exposure. Banks and
savings institutions are subject to interest rate risk when assets and
liabilities mature or reprice at different times (duration risk), against
different indices (basis risk) or for different terms (yield curve risk). The
decision to control or accept interest rate risk can only be made with an
understanding of the probability of various scenarios occurring. Having
liabilities that reprice more quickly than assets is beneficial when interest
rates fall, but may be detrimental when interest rates rise.

  The Company manages interest rate risk by, among other things, maintaining a
portfolio consisting primarily of adjustable rate mortgage ("ARM") loans. ARM
loans comprised 97% of the total loan portfolio at March 31, 1997 and 1996. The
percentage of monthly adjustable ARMs to total loans was approximately 76% and
75% at March 31, 1997 and 1996, respectively. Interest sensitive assets provide
the Company with a degree of long-term protection from rising interest rates. At
March 31, 1997, approximately 93% of Fidelity's total loan portfolio consisted
of loans which mature or reprice within one year, compared to approximately 92%
at March 31, 1996.  Fidelity has in recent periods been negatively impacted by
the fact that increases in the interest rates accruing on Fidelity's ARM loans
lagged the increases in interest rates accruing on its deposits due to reporting
delays and contractual look-back periods contained in the Bank's loan documents.
At March 31, 1997, 93% of the Bank's

                                       10
<PAGE>
 
loans, which are indexed to the Eleventh District Cost of Funds Index ("COFI"),
as with all COFI portfolios in the industry, do not reprice until some time
after the industry liabilities composing COFI reprice. The Company's liabilities
reprice generally in line with the cost of funds of institutions which comprise
the Federal Home Loan Bank (the "FHLB") Eleventh District. In the Company's
case, the lag between the repricing of its liabilities and its ARM loans indexed
to COFI is approximately four months. Thus, when rates rise sharply, as in the
latter part of 1996 and early 1997, there will be upward pressure on rates paid
on deposit accounts and wholesale borrowings, and the Company's net interest
income will be adversely affected until the majority of its interest-earning
assets fully reprice. Conversely, in a falling interest rate environment, such
as the period in early 1996, interest income will be positively affected.

  The Company utilizes various financial instruments in the normal course of its
business. By their nature all such instruments involve risk, and the maximum
potential loss may exceed the value at which such instruments are carried. As is
customary for these types of instruments, the Company usually does not require
collateral or other security from other parties to these instruments. The
Company manages its credit exposure to counterparties through credit approvals,
credit limits and other monitoring procedures. The Company's Credit Policy
Committee makes recommendations regarding counterparties and credit limits which
are subject to approval by the Board of Directors.

  The Company may employ interest rate swaps, caps and floors in the management
of interest rate risk. An interest rate swap agreement is a financial
transaction where two counterparties agree to exchange different streams of
payments over time. An interest rate swap involves no exchange of principal
either at inception or upon maturity; rather, it involves the periodic exchange
of interest payments arising from an underlying notional principal amount.
Interest rate caps and floors generally involve the payment of a one-time
premium to a counterparty who, if interest rates rise or fall above or below a
predetermined level, will make payments to the Company at an agreed upon rate on
a notional amount of money for the term of the agreement, until such time as
interest rates fall below or rise above the cap or floor level.

  During the third quarter of 1996, the Company entered into a one-year advisory
agreement with an investment advisor, pursuant to which the advisor will
recommend investments, subject to prior approval and direction of the Company,
and execute investment purchases in accordance with the Company's investment
strategy. Under this agreement, outstanding forward commitments to purchase
adjustable rate MBS totaled $27.5 million at March 31, 1997. Also outstanding in
relation to this managed portfolio at March 31, 1997, were $28.0 million
notional amount of interest rate caps which will mature in 2003, $5.0 million
notional amount interest rate swaps which will mature in 2002 and $7.0 million
notional amount of put options on treasury futures with an exercise date in
1997.

  The Company is also considering plans to purchase assets (loans and
securities) that may exceed $900 million in 1997.  See "--Business Strategy."

                                       11
<PAGE>
 
  The following table sets out the maturity and rate sensitivity of the
interest-earning assets and interest-bearing liabilities as of March 31, 1997.
"Gap," as reflected in the table, represents the estimated difference between
the amount of interest-earning assets and interest-bearing liabilities repricing
during future periods as adjusted for interest-rate swaps and other financial
instruments as applicable, and based on certain assumptions, including those
stated in the notes to the table.

                     MATURITY AND RATE SENSITIVITY ANALYSIS
<TABLE>
<CAPTION>
 
                                                                           AS OF MARCH 31, 1997
                                                                          MATURITY OR REPRICING
                                       -----------------------------------------------------------------------------------------
                                           WITHIN 3          4-12            1-5            6-10         OVER 10                  
                                            MONTHS          MONTHS          YEARS           YEARS         YEARS         TOTAL     
                                          -----------    ------------    ------------    -----------    ---------    -----------  
                                                                          (DOLLARS IN THOUSANDS)
<S>                                       <C>            <C>             <C>             <C>            <C>          <C>
INTEREST-EARNING ASSETS:
 Cash..................................    $   69,902      $       --      $       --        $    --     $     --     $   69,902

 Investment securities (1) (2).........        53,176           2,209         116,181             --       41,634        213,200
 MBS (1)...............................        54,921           1,853              --          6,711      171,779        235,264
 Loans receivable:
   ARMs and other adjustables (3)......     2,042,231         477,753          93,354          4,414          111      2,617,863
   Fixed rate loans....................           635           5,473           3,499         14,778       60,877         85,262
                                           ----------      ----------      ----------      ---------     --------     ----------
   Total gross loans receivable........     2,042,866         483,226          96,853         19,192       60,988      2,703,125
                                           ----------      ----------      ----------      ---------     --------     ----------
    Total..............................     2,220,865         487,288         213,034         25,903      274,401     $3,221,491
                                           ----------      ----------      ----------      ---------     --------     ==========
INTEREST-BEARING LIABILITIES:
 Deposits:
   Checking and savings accounts (4)...       347,974              --              --             --           --     $  347,974
   Money market accounts (4)...........        65,343              --              --             --           --         65,343
   Fixed maturity deposits:
    Retail customers...................        13,688       1,250,615         821,523          4,800        1,289      2,091,915
    Wholesale  customers...............           304           2,550           8,905             --           --         11,759
                                           ----------      ----------      ----------      ---------     --------     ----------
           Total deposits..............       427,309       1,253,165         830,428          4,800        1,289      2,516,991
                                           ----------      ----------      ----------      ---------     --------     ----------
 Borrowings:
   FHLB advances (3)...................       192,826          74,325          20,000        100,000           --        387,151
   Other...............................       140,000              --              --             --           --        140,000
                                           ----------      ----------      ----------      ---------     --------     ----------
    Total borrowings...................       332,826          74,325          20,000        100,000           --        527,151
                                           ----------      ----------      ----------      ---------     --------     ----------
           Total.......................       760,135       1,327,490         850,428        104,800        1,289     $3,044,142
                                           ----------      ----------      ----------      ---------     --------     ==========
IMPACT OF HEDGING......................         5,000              --          (5,000)            --           --
                                           ----------      ----------      ----------      ---------     --------
REPRICING GAP..........................    $1,465,730      $ (840,202)     $ (642,394)     $ (78,897)    $273,112
                                           ==========      ===========     ===========     ==========    ========
GAP TO TOTAL ASSETS....................         44.49%         (25.50)%        (19.50)%        (2.39)%       8.29%
CUMULATIVE GAP TO TOTAL ASSETS.........         44.49%          18.99 %         (0.51)%        (2.90)%       5.39%
</TABLE>
______________ 
(1) Repricings shown are based on the contractual maturity or repricing
    frequency of the instrument.
(2) Investment securities include FHLB stock of $53.2 million.
(3) ARMs and variable rate borrowings from the FHLB system ("FHLB advances") are
    primarily in the shorter categories as they are subject to interest rate
    adjustments.
(4) These liabilities are subject to daily adjustments and are therefore
    included in the "Within 3 Months" category.


  Analysis of the Gap provides only a static view of the Company's interest rate
sensitivity at a specific point in time. The actual impact of interest rate
movements on the Company's net interest income may differ from that implied by
any Gap measurement. The actual impact on net interest income may depend on the
direction and magnitude of the interest rate movement, as well as competitive
and market pressures.

                                       12
<PAGE>
 
ASSET QUALITY

 General

  The Company's loan portfolio is primarily secured by assets located in
Southern California and is comprised principally of single family and
multifamily (2 units or more) residential loans. At March 31, 1997 and 1996, 19%
of Fidelity's real estate loan portfolio consisted of California single family
residences, while another 11% and 62% consisted of California multifamily
dwellings of 2 to 4 units and 5 or more units, respectively.

  The performance of the Company's loans secured by multifamily and commercial
properties has been adversely affected by Southern California economic
conditions. These portfolios are particularly susceptible to the potential for
further declines in the Southern California economy, such as increasing vacancy
rates, declining rents, increasing interest rates, declining debt coverage
ratios, and declining market values for multifamily and commercial properties.
In addition, the possibility that investors may abandon properties or seek
bankruptcy protection with respect to properties experiencing negative cash
flow, particularly where such properties are not cross-collateralized by other
performing assets, can also adversely affect the multifamily loan portfolio.
There can be no assurances that current improved economic indicators will have a
material impact on the Bank's portfolio in the near future as many factors key
to recovery may be impacted adversely by the Federal Reserve Board's interest
rate policy as well as other factors.

  The Bank's internal asset review process reviews the quality and
recoverability of each of those assets which exhibit credit risk to the Bank
based on delinquency and other criteria in order to establish adequate general
valuation allowance ("GVA") and specific valuation allowance ("SVA").


 Accelerated Asset Resolution Plan

  An important component of the Company's business strategy is the reduction of
risk in the Bank's loan and REO portfolios. In the fourth quarter of 1995, the
Bank adopted the Plan, which was designed to aggressively dispose of, resolve or
otherwise manage a pool (the "AARP Pool") of primarily multifamily loans and
REO that at that time were considered by the Bank to have higher risk of future
nonperformance or impairment relative to the remainder of the Bank's multifamily
loan portfolio. The Plan reflected both an acceleration in estimated timing of
asset resolution, as well as a potential change in recovery method from the
normal course of business.

  The AARP Pool originally consisted of 411 assets with an aggregate gross book
balance of approximately $213.3 million, comprised of $137.0 million in gross
book balance of loans and $76.3 million in gross book balance of REO. In an
effort to maximize recovery on loans and REO included in the AARP Pool, the Plan
allowed for a range of possible methods of resolution including, but not limited
to, (i) individual loan restructuring, potentially including additional
extensions of credit or write-offs of existing principal, (ii) foreclosure and
sale of collateral properties, (iii) securitization of loans, (iv) the bulk sale
of loans and (v) bulk sale or accelerated disposition of REO properties.

  As a consequence of the adoption of the Plan, the Bank recorded a $45.0
million loan portfolio charge in the fourth quarter of 1995, which was reflected
as a credit to the Bank's allowance for estimated loan and REO losses. This
amount represented the estimated additional losses, net of SVAs, anticipated to
be incurred by the Bank in executing the Plan. Such additional losses
represented, among other things, estimated reduced recoveries from restructuring
loans and the acceptance of lower proceeds from the sale of individual REO and
the estimated incremental losses associated with recovery through possible bulk
sales of performing and nonperforming loans and REO.

  Through March 31, 1997, (i) $32.7 million in gross book balances of AARP Pool
loans had been resolved through either a negotiated sale or discounted payoff,
(ii) $7.9 million in gross book balances of AARP Pool loans were collected
through normal principal amortization or paid off through the normal course
without loss, (iii) $22.5 million in gross book balances of AARP Pool loans had
been modified or restructured and retained in the Bank's mortgage portfolio,
(iv) $8.0 million in gross book balances of AARP Pool loans were removed from
the AARP Pool upon management's determination that such assets no longer met the
risk profile for inclusion in

                                       13
<PAGE>
 
the AARP Pool or that accelerated resolution of such assets was no longer
appropriate and (v) $103.4 million in gross book balances of REO were sold
($40.9 million in gross book balances of AARP Pool loans were taken through
foreclosure and acquired as REO since the inception of the AARP). As of March
31, 1997, the AARP Pool consisted of 87 assets with an aggregate gross book
balance of $38.9 million, comprised primarily of accruing and nonaccruing
multifamily real estate loans totaling approximately $25.0 million and REO
properties totaling approximately $13.9 million, which are reported as real
estate owned on the statement of financial condition. Through March 31, 1997, of
the $45.0 million of reserves established in connection with the Plan, $24.4
million had been charged off and $14.1 million had been allocated to SVAs or REO
writedowns in connection with the Bank's estimate of recovery for AARP Pool
assets. The Bank anticipates that the remaining pool of AARP assets will be
resolved by year-end 1997.

  Notwithstanding the actions taken by the Bank in implementing the Plan, there
can be no assurance that the AARP Pool assets retained by the Bank will not
result in additional losses. The Bank's allowance for loan and REO losses and
the SVAs established in connection with such assets are ultimately subjective
and inherently uncertain.  There can be no assurance that further additions to
the Bank's allowance for loan and REO losses will not be required in the future
in connection with such assets, which could have an adverse effect on the Bank's
financial condition, results of operations and levels of regulatory capital.


 Classified Assets

  Total classified assets decreased $29.2 million or 16.8% from December 31,
1996, to $144.9 million at March 31, 1997. This decrease was primarily due to a
decrease in performing classified loans and the large volume of REO sales during
the first quarter of 1997.  While classified assets decreased from December 31,
1996 to March 31, 1997, the ratio of nonperforming assets ("NPAs") to total
assets increased from 1.83% at December 31, 1996, to 1.92% at March 31, 1997.
This increase is primarily due to an increased level of NPLs at March 31, 1997,
compared to December 31, 1996.

                                       14
<PAGE>
 
  The following table presents net classified assets by property type at the
dates indicated:
<TABLE>
<CAPTION>

                                           MARCH 31,    DECEMBER 31,    SEPTEMBER 30,      JUNE 30,      MARCH 31,
                                              1997          1996             1996            1996          1996
                                           ----------   -------------   --------------   -----------   ------------
                                                                   (DOLLARS IN THOUSANDS)
<S>                                        <C>            <C>            <C>              <C>            <C>
Performing classified loans:
   Single family........................    $  2,757       $  4,555       $ 10,054        $  8,098       $  6,638
   Multifamily:
       2 to 4 units.....................       5,527          6,030          9,374          10,227         11,173
       5 to 36 units....................      50,306         60,785        146,050         148,073        115,857
       37 units and over................      12,196         10,375         42,861          43,564         48,656
                                            --------       --------       --------        --------       --------
          Total multifamily properties..      68,029         77,190        198,285         201,864        175,686
   Commercial and other.................       9,342         29,503(1)      40,628(1)       41,885(1)      39,955(1)
                                            --------       --------       --------        --------       --------
       Total performing classified loans      80,128        111,248        248,967         251,847        222,279
                                            --------       --------       --------        --------       --------
Nonperforming classified loans:
   Single family........................       7,001          8,019          7,478           6,306          5,897
   Multifamily:
       2 to 4 units.....................       5,527          5,959          4,897           4,453          4,950
       5 to 36 units....................      21,041         18,071         19,200          24,989         20,699
       37 units and over................       4,162          2,671          1,665           4,019          4,720
                                            --------       --------       --------        --------       --------
          Total multifamily properties..      30,730         26,701         25,762          33,461         30,369
   Commercial and other.................       1,982          1,405          3,240           3,525          3,845
                                            --------       --------       --------        --------       --------
       Total nonperforming classified         39,713         36,125         36,480          43,292         40,111
        loans...........................    --------       --------       --------        --------       --------
          Total classified loans........     119,841        147,373        285,447         295,139        262,390
                                            --------       --------       --------        --------       --------
REO:
   Single family........................       5,211          3,185          3,548           2,802          3,564
   Multifamily:
       2 to 4 units.....................       2,766          3,410          4,018           3,297          5,246
       5 to 36 units....................      11,218         13,574         12,331           7,457          7,345
       37 units and over................       2,812          1,844          1,844           1,265          1,439
                                            --------       --------       --------        --------       --------
          Total multifamily properties..      16,796         18,828         18,193          12,019         14,030
   Commercial and other.................       2,933          3,950          4,475           6,398          6,339
                                            --------       --------       --------        --------       --------
       Net REO before REO GVA...........      24,940         25,963         26,216          21,219         23,933
   REO GVA..............................      (1,300)        (1,300)        (1,000)           (700)          (400)
                                            --------       --------       --------        --------       --------
       Total REO........................      23,640         24,663         25,216          20,519         23,533
                                            --------       --------       --------        --------       --------
Other classified assets.................       1,382          2,060          2,503           3,100          2,979
                                            --------       --------       --------        --------       --------
       Total classified assets..........    $144,863       $174,096       $313,166        $318,758       $288,902
                                            ========       ========       ========        ========       ========
</TABLE>
________________
(1)  Includes a hotel property loan with a balance of $18.4 million at December
     31, 1996.

                                       15
<PAGE>
 
 Delinquent Loans

  During the first quarter of 1997, total delinquent loans decreased $3.9
million, or 5.9%, from March 31, 1996. The following table presents loan
delinquencies by number of days delinquent and by property type as of the dates
indicated. All assets are reported net of specific reserves and writedowns.
<TABLE>
<CAPTION>
 
 
                                                                   MARCH 31,    DECEMBER 31,    MARCH 31,    
                                                                      1997          1996           1996      
                                                                   ----------   -------------   ----------   
<S>                                                                <C>          <C>             <C>          
                                                                           (Dollars in thousands)            
Delinquencies by number of days:                                                                             
  30 to 59 days.........................................                0.63%           0.55%        0.59%   
  60 to 89 days.........................................                0.24            0.43         0.33    
  90 days and over......................................                1.48            1.31         1.37    
                                                                     -------         -------      -------    
Loan delinquencies to net loan portfolio................                2.35%           2.29%        2.29%   
                                                                     =======         =======      =======    
Delinquencies by property type:                                                                              
 Single family:                                                                                              
  30 to 59 days.........................................             $ 4,933         $ 4,986      $ 4,285    
  60 to 89 days.........................................               1,947           3,479        1,704    
  90 days and over......................................               6,770           7,747        5,897    
                                                                     -------         -------      -------    
                                                                      13,650          16,212       11,886    
                                                                     -------         -------      -------    
    Percent to applicable loan portfolio................                2.72%           3.15%        2.09%   
Multifamily (2 to 4 units):                                                                                  
  30 to 59 days.........................................               1,856           1,023        1,914    
  60 to 89 days.........................................                 958           1,790        1,735    
  90 days and over......................................               5,527           5,959        4,951    
                                                                     -------         -------      -------    
                                                                       8,341           8,772        8,600    
                                                                     -------         -------      -------    
    Percent to applicable loan portfolio................                2.70%           2.79%        2.60%   
Multifamily (5 to 36 units):                                                                                 
  30 to 59 days.........................................               5,100           5,617        8,427    
  60 to 89 days.........................................               3,545           6,130        5,128    
  90 days and over......................................              21,041          18,071       20,698    
                                                                     -------         -------      -------    
                                                                      29,686          29,818       34,253    
                                                                     -------         -------      -------    
    Percent to applicable loan portfolio................                2.18%           2.15%        2.33%   
Multifamily (37 units and over):                                                                             
  30 to 59 days.........................................               1,755           2,460          698    
  60 to 89 days.........................................                  --              --           --    
  90 days and over......................................               4,162           2,671        4,720    
                                                                     -------         -------      -------    
                                                                       5,917           5,131        5,418    
                                                                     -------         -------      -------    
    Percent to applicable loan portfolio................                1.94%           1.68%        1.67%   
Commercial and Industrial:                                                                                   
  30 to 59 days.........................................               3,184             873        1,811    
  60 to 89 days.........................................                 115             269          985    
  90 days and over......................................               1,982           1,405        3,845    
                                                                     -------         -------      -------    
                                                                       5,281           2,547        6,641    
                                                                     -------         -------      -------    
      Percent to applicable loan portfolio..............                2.70%           1.26%        2.94%   
Total loan delinquencies, net...........................             $62,875         $62,480      $66,798    
                                                                     =======         =======      =======    
Loan delinquencies to net loan portfolio................                2.35%           2.29%        2.29%   
                                                                     =======         =======      =======
</TABLE>

                                      16
<PAGE>
 
  The following table presents net delinquent loans at the dates indicated:
<TABLE>
<CAPTION>

                                            MARCH 31,   DECEMBER 31,   SEPTEMBER 30,     JUNE 30,     MARCH 31,
                                              1997          1996           1996            1996         1996
                                            ---------   -----------    ------------      --------      ---------
                                                     (Dollars in thousands)
<S>                                        <C>           <C>             <C>           <C>           <C>
Number of days delinquent:
      30 to 59 days........................ $ 16,828       $ 14,959        $ 22,748     $ 23,467       $ 17,135
      60 to 89 days........................    6,565         11,668           8,260        8,026          9,552
      90 days and over.....................   39,482         35,853          36,249       43,292         40,111
                                             -------        -------         -------      -------        -------
           Total delinquencies............. $ 62,875       $ 62,480        $ 67,257     $ 74,785       $ 66,798
                                            ========       ========        ========     ========       ========

</TABLE>

 Nonperforming Assets

  All assets and ratios are reported net of specific reserves and writedowns
unless otherwise stated.  The following table presents asset quality details at
the dates indicated:
<TABLE>
<CAPTION>

                                           MARCH 31,    DECEMBER 31,    SEPTEMBER 30,      JUNE 30,      MARCH 31,
                                              1997          1996             1996            1996           1996
                                           ----------   -------------   --------------   ------------   ------------
                                                                    (Dollars in thousands)
<S>                                        <C>          <C>             <C>             <C>            <C>

NPAs by Type:
  NPLs....................................  $ 39,713     $ 36,125        $ 36,480       $ 43,292       $ 40,111
  REO, net of REO GVA.....................    23,640       24,663          25,216         20,519         23,533
                                            --------     --------        --------       --------       --------
   Total NPAs.............................  $ 63,353     $ 60,788        $ 61,696       $ 63,811       $ 63,644
                                            ========    =========        ========       ========       ========

NPAs by Composition:
     Single family residences.............  $ 12,212     $ 11,204        $ 10,968       $  9,108       $  9,461
     Multifamily 2 to 4 units.............     8,293        9,369           8,974          7,750         10,197
     Multifamily 5 units and over.........    39,233       36,160          35,040         37,730         34,202
     Commercial and other.................     4,915        5,355           7,714          9,923         10,184
     REO GVA..............................    (1,300)      (1,300)         (1,000)          (700)          (400)
                                            --------     --------        --------       --------        -------
     Total NPAs...........................    63,353       60,788          61,696         63,811         63,644
     Total troubled debt restructuring
      ("TDR").............................    42,696       45,196          49,575         57,079         53,745
                                            --------     --------        --------       --------        -------
     Total TDRs and NPAs..................  $106,049     $105,984        $111,271       $120,890       $117,389
                                            ========     ========        ========       ========       ========

Classified Assets:
     NPAs.................................  $ 63,353     $ 60,788        $ 61,696       $ 63,811       $ 63,644
     Performing classified loans..........    80,128      111,248(1)      248,967(1)     251,847(1)     222,279(1)
     Other classified assets..............     1,382        2,060           2,503          3,100          2,979
                                            --------     --------        --------       --------        -------
     Total classified assets..............  $144,863     $174,096        $313,166       $318,758       $288,902
                                            ========     ========        ========       ========       ========

Classified Asset Ratios:
   NPLs to total assets...................      1.21%        1.08%           1.10%          1.31%         1.22%
   NPAs to total assets...................      1.92%        1.83%           1.86%          1.94%         1.94%
   TDRs to total assets...................      1.30%        1.36%           1.49%          1.73%         1.64%
   NPAs and TDRs to total assets..........      3.22%        3.18%           3.35%          3.67%         3.58%
   Classified assets to total assets......      4.40%        5.23%           9.42%          9.67%         8.81%
   REO to NPAs............................     37.31%       40.57%          40.87%         32.16%        36.98%
   NPLs to NPAs...........................     62.69%       59.43%          59.13%         67.84%        63.02%

</TABLE>

--------------
(1)  Includes a hotel property loan with a balance of $18.4 million.

                                       17
<PAGE>
 
  Direct costs of foreclosed real estate operations totaled $1.6 million and
$1.8 million for the three months ended March 31, 1997 and 1996.  The following
table provides information about the change in the book value and the number of
properties owned and obtained through foreclosure for the periods indicated:
<TABLE>
<CAPTION>

                                                                      AT OR FOR THE THREE MONTHS ENDED
                                                                                 MARCH 31,
                                                                    ----------------------------------     
                                                                      1997                      1996
                                                                    ---------                 --------   
                                                                          (DOLLARS IN THOUSANDS)
<S>                                                                 <C>                       <C>
REO net book value................................................  $23,640                   $23,533
Net (decrease) increase in REO book value for the period..........   (1,024)                  $ 4,012

Number of real estate properties owned............................      135                       131
Increase in number of properties owned for the period.............        4                        22

Number of properties foreclosed for the period....................       73                        69
Gross book value of properties foreclosed.........................  $21,130                   $20,563
Average gross book value of properties foreclosed.................  $   289                   $   298

</TABLE>

                                       18
<PAGE>
 
 Allowance for Estimated Loan and REO Losses

  The following table summarizes the Bank's reserves, writedowns and certain
coverage ratios at the dates indicated:
<TABLE>
<CAPTION>

                                                              MARCH 31,     DECEMBER 31,    MARCH 31,
                                                                1997           1996           1996
                                                              --------     ------------    ---------
Loans:                                                                (DOLLARS IN THOUSANDS)
<S>                                                            <C>        <C>          <C>
  GVA........................................................  $22,550         $25,308      $38,202
  SVA........................................................   30,332          32,200       43,228
                                                               -------         -------      -------
   Total allowance for estimated losses (1)..................  $52,882         $57,508      $81,430
                                                               =======         =======      =======
  Writedowns (2).............................................  $   146         $   146      $   316
                                                               =======         =======      =======
  Total allowance and loan writedowns to gross loans (3).....     1.96%           2.09%        2.74%
  Total loan allowance to gross loans (3)....................     1.95%           2.08%        2.73%
  Loan GVA to loans (3)......................................     0.85%           0.93%        1.31%
  Loan GVA to NPLs...........................................    56.78%          70.06%       95.24%
  NPLs to total loans........................................     1.50%           1.34%        1.39%

REO:
  REO GVA....................................................  $ 1,300         $ 1,300      $   400
  SVA........................................................      886             781        2,693
                                                               -------         -------      -------
   Total allowance for estimated losses......................  $ 2,186         $ 2,081      $ 3,093
                                                               =======         =======      =======
  Writedowns (2).............................................  $13,281         $14,819      $18,157
                                                               =======         =======      =======
Total REO allowance and REO writedowns to
  gross REO..................................................    39.55%          40.66%       47.45%

  Total REO allowance to gross REO (4).......................      8.4%           7.78%       11.62%
  REO GVA to REO (3).........................................     5.21%           5.01%        1.67%
 Total Loans and REO:
  GVA........................................................  $23,850         $26,608      $38,602
  SVA........................................................   31,218          32,981       45,921
                                                               -------         -------      -------
   Total allowance for estimated losses (1)..................  $55,068         $59,589      $84,523
                                                               =======         =======      =======
  Writedowns (2).............................................  $13,427         $14,965      $18,473
                                                               =======         =======      =======
Total allowance and writedowns to gross loans and
  REO........................................................     2.49%           2.66%        3.41%
  Total allowance to gross loans and REO (3).................     2.01%           2.14%        2.81%
  Total GVA to loans and REO (3).............................     0.89%           0.97%        1.31%
  Total GVA to NPAs..........................................    36.89%          42.86%       60.27%
</TABLE>
___________
(1) At March 31, 1997, December 31, 1996 and March 31, 1996, the allowance for
    estimated loan losses includes $14.1 million, $16.7 million and $31.8
    million, respectively, of remaining loan GVA and SVA for the Plan. See 
    "--Asset Quality--Accelerated Asset Resolution Plan."
(2) Writedowns include cumulative charge-offs on outstanding loans and REO as of
    the dates indicated.
(3) Loans and REO, as applicable, in these ratios are calculated prior to their
    reduction for loan and REO GVA, respectively, but are net of specific
    reserves and writedowns.
(4) Net of writedowns.

                                       19
<PAGE>
 
  The following schedule summarizes the activity in the Bank's allowances for
estimated loan and real estate losses:
<TABLE>
<CAPTION>
 
                                                             THREE MONTHS ENDED MARCH 31,
                                    ------------------------------------------------------------------------------
                                                     1997                                    1996
                                    -------------------------------------   --------------------------------------
                                                  REAL ESTATE                              REAL ESTATE
                                     LOANS (1)       OWNED         TOTAL      LOANS (1)       OWNED         TOTAL
                                    ----------   ------------   ----------   ----------   ------------   --------- 
<S>                                 <C>          <C>            <C>          <C>          <C>            <C>
                                                                (DOLLARS IN THOUSANDS)
 
 Balance on January 1,...........   $  57,508         $2,081    $  59,589    $  89,435       $  3,492    $  92,927
    Provision for losses.........       4,251            742        4,993        3,905            668        4,573
    Charge-offs..................     (10,063)          (797)     (10,860)     (12,127)        (1,391)     (13,518)
    Allocation from GVA to REO...          --             --           --         (324)           324           --
    Recoveries and other.........       1,186            160        1,346          541             --          541
                                    ---------         ------    ---------    ---------       --------    ---------
 Balance on March 31,............   $  52,882         $2,186    $  55,068    $  81,430       $  3,093    $  84,523
                                    =========         ======    =========    =========       ========    =========
 
 
</TABLE>
-----------------
(1) All allowances for loan losses are for the Bank's portfolio of mortgage
  loans.


  The following table details the activity affecting specific loss reserves for
the periods indicated:
<TABLE>
<CAPTION>
 
                                                    THREE MONTHS ENDED
                                                      MARCH 31, 1997
                                          -------------------------------------
                                                       REAL ESTATE
                                            LOANS         OWNED         TOTAL
                                          ----------   ------------   --------- 
                                                 (DOLLARS IN THOUSANDS)
<S>                                       <C>            <C>         <C>
 
Balance on January 1,...............       $  32,200       $  781     $  32,981
    Allocations from GVA to specific
     Reserves.......................           8,195          902         9,097
    Charge-offs.....................         (10,063)        (797)      (10,860)
                                            ---------       ------     ---------
Balance at end of period indicated...      $  30,332       $  886     $  31,218
                                            =========       ======     =========
 
</TABLE>

NONINTEREST INCOME (EXPENSE)

  Noninterest income has three major components: (a) noninterest income from
ongoing operations, which includes loan fee income, gains or losses on loans
held for sale, fees earned on the sale of uninsured investment products and
retail banking fees, (b) income/expenses associated with REO, which includes
both the provision for real estate losses as well as income/expenses incurred by
the Bank associated with the operation of its REO properties and (c) gains and
losses on the sales of loan servicing, investment securities and MBS. Items (b)
and (c) can fluctuate widely, and could therefore mask the underlying fee
generating performance of the Company on an ongoing basis.

  Net noninterest income increased by $1.4 million from $0.3 million in the
first quarter 1996 to $1.7 million in the first quarter 1997.  The major
components of this increase are:  (a) net gains from MBS activities in the first
quarter of 1997 increased by $1.2 million primarily as a result of increased
sales and (b) fee income from uninsured investment product increased by $0.3
million primarily as a result of increased sales.


OPERATING EXPENSES

  Operating expenses decreased by $2.3 million to $14.3 million for the first
quarter 1997 compared to $16.6 million for the first quarter 1996.  The change
was primarily due to (a) a $0.3 million decrease in personnel and benefit
expense due to a decline of 65 or 12.2% in the three month average number of
FTEs, (b) a decrease of $1.5 million of FDIC insurance costs due to the
recapitalization of the SAIF in 1996 and an upgrade in the Bank's assessment
classification and (c) a decrease of $0.5 million in occupancy and other office
related costs which was largely tied to the overall reduction in personnel and
overhead costs.

                                       20
<PAGE>
 
  Decreased operating expenses resulted in a decrease in the annualized
operating expense ratio to 1.72% for the first quarter 1997 from 2.04% for the
first quarter 1996, based on the  total average asset size of the Company of
approximately $3.3 billion for the quarters ended March 31, 1997 and 1996.

  Due to the sensitivity of the operating expense ratio to changes in the size
of the balance sheet, management also looks at trends in the efficiency ratio to
assess the changing relationship between operating expenses and income. The
efficiency ratio measures the amount of cost expended by the Company to generate
a given level of revenues in the normal course of business. It is computed by
dividing total operating expense by net interest income and noninterest income,
excluding infrequent items.  A decrease in the efficiency ratio is favorable in
that it indicates less expenses were incurred to generate a given level of
revenue.

  The efficiency ratio decreased to 61.97% for the first quarter 1997 from
67.71% for the first quarter 1996.  This decrease was due to increased
noninterest income and decreased operating expense.


INCOME TAXES

  The Company's combined federal and state statutory tax rate is approximately
42.0% of earnings before income taxes. The effective tax benefit rate of 66.3%
on income before income taxes for the quarter ended March 31, 1997, reflects the
federal and state tax benefit attributable to the utilization of net operating
loss carryforwards, and the partial recognition of the deferred tax asset
through a $2.4 million reduction of the related valuation allowance, offset by a
$0.l million current tax expense.

  As of December 31, 1996 a valuation allowance was provided for the total net
deferred tax asset.  Under Statement of Financial Accounting Standards
("SFAS") No. 109, Accounting for Income Taxes, the reduction in valuation
allowance is dependent upon a "more likely than not" expectation of realization
of the deferred tax asset, based upon the weight of available evidence.  The
Company has realized book earnings, before unusual items, for each of the five
consecutive quarters ended March 31, 1997.  The loss reflected for the quarter
ended September 30, 1996, was attributable to a one-time $18 million SAIF
assessment which is considered a nonrecurring item.  After consideration of the
Company's recent earnings history and other available evidence, management of
the Company determined that under the criteria of SFAS No. 109 it was
appropriate to record a $2.3 million net tax benefit for the quarter ended March
31, 1997.

  The analysis of available evidence is performed each quarter utilizing the
"more likely than not" criteria required by SFAS 109 to determine the amount, if
any, of the deferred tax asset to be realized.  Accordingly, there can be no
assurance that the Company will recognize additional portions of its deferred
tax asset in future periods.  Moreover, the criteria of SFAS No. 109 could
require the partial or complete recapture of the $2.4 million deferred tax
benefit into expense in future periods.

                                       21
<PAGE>
 
REGULATORY CAPITAL COMPLIANCE

  The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA")
required the Office of Thrift Supervision (the "OTS") to implement a system
providing for regulatory sanctions against institutions that are not adequately
capitalized. The severity of these sanctions increases to the extent that an
institution's capital continues to decline. Under FDICIA, the OTS issued the
Prompt Corrective Action ("PCA") regulations which established specific
capital ratios for five separate capital categories as set forth below:
<TABLE>
<CAPTION>
 
                                     CORE CAPITAL TO      CORE CAPITAL
                                        ADJUSTED               TO               TOTAL CAPITAL
                                      TOTAL ASSETS        RISK-WEIGHTED               TO
                                    (LEVERAGE RATIO)         ASSETS          RISK-WEIGHTED ASSETS
                                 --------------------   -----------------   -----------------------
<S>                                   <C>                   <C>                  <C>
Well capitalized.................     5% or above          6% or above           10% or above
Adequately capitalized...........     4% or above          4% or above           8% or above
Undercapitalized.................       Under 4%             Under 4%             Under 8%
Significantly undercapitalized...       Under 3%             Under 3%             Under 6%
Critically undercapitalized......   Ratio of tangible equity to adjusted total assets of 2% or less
 
</TABLE>

  The following table summarizes the capital ratios required by FDICIA for an
institution to be considered well capitalized and Fidelity's regulatory capital
at March 31, 1997 as compared to such ratios.

<TABLE>
<CAPTION>
 
                                      CORE CAPITAL TO            CORE CAPITAL TO            TOTAL CAPITAL TO
                                         ADJUSTED                 RISK-WEIGHTED               RISK-WEIGHTED 
                                       TOTAL ASSETS                  ASSETS                      ASSETS     
                                   ---------------------      ----------------------      ----------------------
                                     BALANCE        %           BALANCE        %            BALANCE        %
                                   -----------    -----       -----------    ------       -----------    -----
                                                              (DOLLARS IN THOUSANDS)
<S>                                <C>           <C>       <C>           <C>        <C>           <C> 
Fidelity's regulatory capital      $   213,200     6.47%      $   213,200     11.12%      $   235,800    12.29%
Well capitalized requirement           164,700     5.00           115,100      6.00           191,800    10.00%
                                   -----------    -----       -----------    ------       -----------    -----
Excess capital                     $    48,500     1.47%      $    98,100      5.12%      $    44,000     2.29%
                                   ===========    =====       ===========    ======       ===========    =====
 
Adjusted assets (1)                $ 3,293,800                $ 1,918,100                  $ 1,918,100
                                   ===========                ===========                  ===========
</TABLE>
____________ 
(1) The term "adjusted assets" refers to the term "adjusted total assets" as
    defined in 12 C.F.R. section 567.1(a) for purposes of core capital
    requirements, and refers to the term "risk-weighted assets" as defined in 12
    C.F.R. section 567.1(bb) for purposes of risk-based capital requirements.


  FDICIA also required the OTS and the federal bank regulatory agencies to
revise their risk-based capital standards to ensure that those standards take
adequate account of interest rate risk, concentration of credit risk, and risks
of nontraditional activities. On January 1, 1994, the OTS proposed an interest
rate risk component for its regulatory capital rule. Under the proposed rule,
savings institutions with "above-normal" interest rate risk exposure would be
subject to a deduction from total capital for purposes of calculating their
risk-based capital requirements.  No interest rate risk component would have
been required to be added to the Bank's risk-based capital requirement at March
31, 1997 had the rule been in effect.

  The Bank is also subject to OTS capital regulations under the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"). These
regulations require Fidelity to maintain: (a) tangible capital of at least 1.5%
of adjusted total assets (as defined in the regulations), (b) core capital of at
least 3% of adjusted total assets (as defined in the regulations) and (c) total
capital of at least 8.0% of risk-weighted assets (as defined in the
regulations).

                                       22
<PAGE>
 
  The following table summarizes the regulatory capital requirements under
FIRREA for Fidelity at March 31, 1997. As indicated in the table, Fidelity's
capital levels at March 31, 1997 exceeded all three of the currently applicable
minimum FIRREA capital requirements.
<TABLE>
<CAPTION>

                                                                                                                      RISK-BASED
                                                   TANGIBLE CAPITAL                      CORE CAPITAL                   CAPITAL
                                          -------------------------------   ----------------------------------------  -----------

                                           BALANCE              %             BALANCE            %           BALANCE           %
                                         ------------   -----------------   ------------   -----------   ------------   ---------
                                                                       (DOLLARS IN THOUSANDS)
<S>                                      <C>            <C>                 <C>            <C>           <C>            <C>
Stockholders' equity (1)..............    $  210,500                         $  210,500                    $  210,500
Unrealized losses on securities.......         2,800                              2,800                         2,800
Adjustments
   Intangible assets..................          (300)                                --                            --
   Nonqualifying mortgage servicing
       rights.........................          (100)                              (100)                         (100)
   Nonincludable subsidiaries.........            --                                 --                            --
   GVA................................            --                                 --                        22,600
                                          ----------                         ----------                    ----------
Regulatory capital (2)................       212,900           6.46%            213,200          6.47%        235,800       12.29%
Required minimum......................        49,400           1.50              98,800          3.00         153,400        8.00
                                          ----------          -----          ----------         -----      ----------       -----
Excess capital........................    $  163,500           4.96%         $  114,400          3.47%     $   82,400        4.29%
                                          ==========          =====          ==========         =====      ==========       =====
Adjusted assets (3)...................    $3,293,500                         $3,293,800                    $1,918,100
                                          ==========                         ==========                    ==========
</TABLE>
------------
(1) Fidelity's total stockholders' equity, in accordance with generally accepted
    accounting principles, was 6.40% of its total assets at March 31, 1997.

(2) Both the OTS and the FDIC may examine the Bank as part of their legally
    prescribed oversight of the industry. Based on their examinations, the
    regulators can direct that the Bank's financial statements be adjusted in
    accordance with their findings.

(3) The term "adjusted assets" refers to the term "adjusted total assets" as
    defined in 12 C.F.R. section 567.1(a) for purposes of tangible and core
    capital requirements, and refers to the term "risk-weighted assets" as
    defined in 12 C.F.R. section 567.1(bb) for purposes of risk-based capital
    requirements.



CAPITAL RESOURCES AND LIQUIDITY


  The Bank derives funds from deposits, FHLB advances, securities sold under
agreements to repurchase, and other short-term and long-term borrowings. In
addition, funds are generated from loan payments and payoffs as well as from the
sale of loans and investments.


 FHLB Advances


  The Bank had net repayments of FHLB advances of $62.7 million for the three
months ended March 31, 1997. This compares to net repayments of $60.0 million
for the three months ended March 31, 1996.


 Commercial paper


  Commercial paper outstanding remained at the same level during the three
months ended March 31, 1997 compared to an increase of $50.0 million for the
three months ended March 31, 1996.


 Loan payments and payoffs


  Loan principal payments, including prepayments and payoffs, provided $53.9
million for the three months ended March 31, 1997 compared to $56.1 million for
the same period in 1996.  The Bank expects that loan payments and prepayments
will remain a significant funding source.

                                       23
<PAGE>
 
 Sales of securities


  The sale of investment securities and MBS provided $56.8 million for the
quarter ended March 31, 1997.  There were no such sales for the three months
ended March 31, 1996.  The Bank held $349.9 million and $190.5 million of
investment securities and MBS in its available for sale portfolio as of March
31, 1997 and 1996, respectively.


 Undrawn sources


  Fidelity maintains other sources of liquidity to draw upon, which at March 31,
1997 included (a) a line of credit with the FHLB with $507.2 million available
(assuming all of the $150.0 million commercial paper capacity is used);  (b)
unused commercial paper facility capacity of $110.0 million;  (c) $196.4 million
in unpledged securities available to be placed in reverse repurchase agreements
or sold; and (d) $618.8 million of unpledged loans, some of which would be
available to collateralize additional FHLB or private borrowings, or be
securitized.


 Deposits


  At March 31, 1997, Fidelity had deposits of $2.5 billion.  The following table
presents the distribution of the Bank's deposit accounts:

<TABLE>
<CAPTION>
 
                                               MARCH 31, 1997              DECEMBER 31, 1996
                                            ----------------------   ----------------------------
                                                          PERCENT                     PERCENT
                                             AMOUNT      OF TOTAL       AMOUNT        OF TOTAL
                                           -----------   ---------   -----------   --------------
                                                            (DOLLARS IN THOUSANDS)
<S>                                        <C>           <C>         <C>           <C>
Money market savings accounts...........    $   63,015        2.5%      $   65,605         2.6%
Checking accounts.......................       297,220       11.8          287,711        11.5
Passbook accounts.......................        53,082        2.1           53,665         2.2
                                            ----------     ------       ----------      ------
   Total transaction accounts...........       413,317       16.4          406,981        16.3
                                            ----------     ------       ----------      ------
Certificates of deposit $100,000 and           562,813       22.4          543,336        21.8
 over...................................
Certificates of deposit less than            1,540,861       61.2        1,545,616        61.9
 $100,000...............................    ----------     ------       ----------      ------
   Total certificates of deposit........     2,103,674       83.6        2,088,952        83.7
                                            ----------     ------       ----------      ------
      Total deposits....................    $2,516,991      100.0%      $2,495,933       100.0%
                                            ==========     ======       ==========      ======
 
</TABLE>
  The Company is currently eligible to accept brokered deposits; however, there
were no brokered deposits outstanding at March 31, 1997 and 1996.


 Repurchase Agreements


  From time to time the Company enters into reverse repurchase agreements by
which it sells securities with an agreement to repurchase the same securities at
a specific future date (overnight to one year). The Company deals only with
dealers who are recognized as primary dealers in U.S. Treasury securities by the
Federal Reserve Board or perceived by management to be financially strong. There
were no reverse repurchase agreements outstanding at March  31, 1997 compared to
repurchase agreements outstanding of $9.9 million at March 31, 1996.  In the
three months ended March 31, 1997, the Company borrowed and repaid funds from
reverse repurchase agreements of $25.5 million compared to $9.9 million of funds
borrowed and repaid during the three months ended March 31, 1996.


 Loan Fundings


  Fidelity originated and purchased $6.5 million of gross loans (excluding
Fidelity's refinancings) in the three months ended March 31, 1997 compared to
$0.3 million in the same period of 1996.

                                       24
<PAGE>
 
 Contingent or potential uses of funds


  The Bank had no unfunded loans at March 31, 1997 and 1996.


 Liquidity


  The OTS regulations require the maintenance of an average daily balance of
liquid assets of at least 5% of the average daily balance of the net
withdrawable accounts and short term borrowings (the "regulatory liquidity
ratio").  The Bank's average regulatory liquidity ratio was 5.61% and 5.50% for
the quarters ended March 31, 1997 and 1996, respectively.


 Holding Company Liquidity


  At March 31, 1997, Bank Plus had cash and cash equivalents of $0.5 million and
no material potential cash producing operations or assets other than its
investments in Fidelity and Gateway. Accordingly, Bank Plus is substantially
dependent on dividends from Fidelity and Gateway in order to fund its cash
needs, including any payment obligations with respect to the potential exchange
offer of Bank Plus Senior Notes for Fidelity's Preferred Stock. In connection
therewith, Fidelity's Board of Directors has approved the payment of a cash
dividend to Bank Plus in the approximate amount of $1.6 million, to assist in
funding Bank Plus' future payment obligations with respect to the Senior Notes.
Such dividend will be paid, if at all, only upon consummation of the
aforementioned exchange offer. See "--Recent Developments". Both Gateway's and
Fidelity's ability to pay dividends or otherwise provide funds to Bank Plus are
subject to significant regulatory restrictions.



PART II.  OTHER INFORMATION



ITEM 1.   LEGAL PROCEEDINGS

  The Bank was named as a defendant in a purported class action lawsuit alleging
violations of federal securities laws in connection with the offering of common
stock by the Bank in 1994 as part of the Bank's previously reported 1994
Restructuring and Recapitalization. The suit was filed by Harbor Finance
Partners ("Harbor") in an alleged class action complaint in the United States
District Court-Central District of California on July 28, 1995 and originally
named as defendants the Bank, Citadel Holding Corporation ("Citadel"), Richard
M. Greenwood (the Bank's chief executive officer and Citadel's former chief
executive officer), J. P. Morgan Securities, Inc., and Deloitte & Touche LLP.
The suit alleged that false or misleading information was provided by the
defendants in connection with the Bank's 1994 Restructuring and Recapitalization
and stock offering and that the defendants knew and failed to disclose negative
information concerning the Bank. A motion to dismiss the original complaint was
filed by the Bank, and was granted without opposition. Thereafter, Harbor filed
an amended complaint which did not include J. P. Morgan Securities, Inc. and
Deloitte & Touche LLP as defendants and which contained some factual and legal
contentions which were different from those set forth originally. On May 21,
1996, the court granted the Bank's and Greenwood's motion to dismiss the first
amended complaint, but granted leave to amend. Following the filing of a second
amended complaint, the Bank and Greenwood filed a motion to dismiss. At a
hearing on July 22, 1996, the court ruled that the case should be dismissed with
prejudice and a formal order to that effect was submitted to the court for
execution. Harbor lodged certain objections to the proposed order, including
objections that the state law claims in the second amended complaint should not
be dismissed with prejudice. The court's order of dismissal was entered on
August 5, 1996 and provided that all claims asserted in the second amended
complaint under federal law were dismissed with prejudice and those under state
law were dismissed without prejudice to their renewal in state court pursuant to
28 U.S.C. (S)1367(b)(3). Harbor has filed a notice of appeal to the order of
dismissal. Briefing in the appeal is now concluded and the appeal awaits hearing
and disposition. On August 30, 1996, Harbor filed an alleged class action
complaint in state court containing allegations similar to those raised in the
federal court action as well as claims for unfair business practices to which
the Bank and Greenwood filed demurrers seeking to have the case dismissed for
failure to state a legally sufficient claim.  These demurrers were sustained
without leave to amend on March 13, 1997 and it is expected that a judgment of
dismissal will be entered in the trial court. The plaintiff will have 60 days
from notice of the entry of judgment to file an appeal.

  In addition, the Bank is a defendant in several individual and purported class
actions brought by several borrowers which raise claims with respect to the
manner in which the Bank serviced certain adjustable rate mortgages which were
originated during the period 1983 through 1988. The actions have been filed
between July

                                       25
<PAGE>
 
1, 1992 and February of 1995. In one case the Bank won a summary judgment in
Federal District Court. This judgment was appealed. On July 25, 1996, the Ninth
Circuit Court of Appeals filed its opinion which affirmed in part, reversed in
part and remanded back to the Federal District Court for further hearing. In
three Los Angeles Superior Court cases, judgment in favor of the Bank was
recently entered. Plaintiff has appealed in all three cases. Two other cases are
pending in the Los Angeles Superior Court. The plaintiffs' principal claim is
that the Bank selected an inappropriate review date to consult the index upon
which the rate adjustment is based that was one or two months earlier than what
was required under the terms of the notes. In a declining interest rate
environment, the lag effect of an earlier review period defers the benefit to
the borrower of such decline, and the reverse would be true in a rising interest
rate environment. The Bank strongly disputes these contentions and is vigorously
defending these suits. The legal responsibility and financial exposure of these
claims presently cannot be reasonably ascertained and, accordingly, there is a
risk that the final outcome of one or more of these claims could result in the
payment of monetary damages which could be material in relation to the financial
condition or results of operations of the Bank. The Bank does not believe the
likelihood of such a result is probable and has not established any specific
litigation reserves with respect to such lawsuits.

  In the normal course of business, the Company and certain of its subsidiaries
have a number of other lawsuits and claims pending.  Although there can be no
assurance, the Company's management and its counsel believe that none of the
foregoing lawsuits or claims will have a material adverse effect on the
financial condition or business of the Company.

                                       26
<PAGE>
 
ITEM 2.   CHANGES IN SECURITIES
  
  Not applicable

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

  Not applicable

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS


  At the annual meeting of shareholders held on April 30, 1997, the shareholders
elected Waldo H. Burnside, Lilly V. Lee and Mark Sullivan III to the Board of
Directors of Bank Plus to serve for three year terms, approved certain
amendments to and a restatement of the Company's 1996 Stock Option Plan, and
ratified the appointment of Deloitte & Touche LLP as the Company's independent
public accountants for 1997.  Of the 18,245,265 shares of Common Stock
outstanding as of the record date, March 26, 1997, the following indicates the
number of votes cast for and against, as well as the number of votes abstaining
and broker non-votes, with respect to each of the three directors, the
amendments and restatement of the Company's 1996 Stock Option Plan and the
ratification of Deloitte & Touche LLP:
<TABLE>
<CAPTION>
                                                                             NUMBER OF VOTES
                                                             -----------------------------------------------
                                                                                                   BROKER
                                                                FOR           AGAINST    ABSTAIN   NON-VOTES
                                                             -----------      -------    -------   ---------
<S>                                                            <C>              <C>          <C>        <C>
Proposal 1 - Election of Directors:
  Waldo H. Burnside.......................................... 15,746,911       2,225        --         N/A
  Lilly V. Lee............................................... 15,746,911       2,225        --         N/A
  Mark Sullivan III.......................................... 15,746,911       2,225        --         N/A
Proposal 2 - Amendments to, and a restatement of, the 1996
  Stock Option Plan.......................................... 12,016,047   3,722,079    11,010          --
Proposal 3 - Ratification of Independent Public Accountants.. 15,733,646       7,150     8,340         N/A

</TABLE>

ITEM 5.   OTHER INFORMATION

  Not applicable

                                       27
<PAGE>
 
ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

  (a) Exhibits

<TABLE>
<CAPTION>
           EXHIBIT
             NO.                                                            DESCRIPTION
-----------------------------   ----------------------------------------------------------------------------------------------------

<S>                             <C>
   2.1                          Agreement and Plan of Reorganization, dated as of March 27, 1996, among Fidelity, Bank Plus
                                Corporation and Fidelity Interim Bank. (incorporated by reference to Exhibit 2.1 to the Form 8-B of
                                Bank Plus filed with the SEC on April 22, 1996 (the ''Form 8-B'')).*
 
   3.1                          Certificate of Incorporation of Bank Plus Corporation (incorporated by reference to Exhibit 3.1 to
                                the Form 8-B).*
 
   3.2                          Bylaws of Bank Plus Corporation (incorporated by reference to Exhibit 3.2 to the Form 8-B).*
 
   4.1                          Specimen of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the
                                Form 8-B).*
 
   4.2                          Form of Indenture relating to senior notes of Fidelity (incorporated by reference to Exhibit
                                4.2 of the Form 8-B).*
 
   10.1                         Settlement Agreement between Fidelity, Citadel and certain lenders, dated as of June 3, 1994
                                (the "Letter Agreement") (incorporated by reference to Exhibit 10.1 to the Form 8-B).*
 
   10.2                         Amendment No. 1 to Letter Agreement, dated as of June 20, 1994 (incorporated by reference to
                                Exhibit 10.2 to the Form 8-B).*
 
   10.3                         Amendment No. 2 to Letter Agreement, dated as of July 28, 1994 (incorporated by reference to
                                Exhibit 10.3 to the Form 8-B).*
 
   10.4                         Amendment No. 3 to Letter Agreement, dated as of August 3, 1994 (incorporated by reference to
                                Exhibit 10.4 to the Form 8-B).*
 
   10.5                         Mutual Release, dated as of August 4, 1994, between Fidelity, Citadel and certain lenders
                                (incorporated by reference to Exhibit 10.5 to the Form 8-B).*
 
   10.6                         Mutual Release between Fidelity, Citadel and The Chase Manhattan Bank, NA, dated June 17,
                                1994 (incorporated by reference to Exhibit 10.6 to the Form 8-B).*
 
   10.7                         Loan and REO Purchase Agreement (Primary), dated as of July 13, 1994, between Fidelity and
                                Colony Capital, Inc. (incorporated by reference to Exhibit 10.7 to the Form 8-B).*
 
   10.8                         Real Estate Purchase Agreement, dated as of August 3, 1994, between Fidelity and CRI
                                (incorporated by reference to Exhibit 10.8 to the Form 8-B).*
 
   10.9                         Loan and REO Purchase Agreement (Secondary), dated as of July 12, 1994, between Fidelity and
                                EMC Mortgage Corporation (incorporated by reference to Exhibit 10.9 to the Form 8-B).*
 
   10.10                        Loan and REO Purchase Agreement (Secondary), dated as of July 21, 1994, between Fidelity and
                                International Nederlanden (US) Capital Corporation, Farallon Capital Partners, L.P.,
                                Tinicum Partners, L.P. and Essex Management Corporation (incorporated by reference to Exhibit 10.10
                                to the Form 8-B).*
 
   10.11                        Purchase of Assets and Liability Assumption Agreement by and between Home Savings of
                                America, FSB and Fidelity, dated as of July 19, 1994 (incorporated by reference to Exhibit 10.11
                                to the Form 8-B).*

   10.12                        Promissory Note, dated July 28, 1994, by CRI in favor of Fidelity and related loan documents
                                (3943 Veselich Avenue) (incorporated by reference to Exhibit 10.12 to the Form 8-B).*
 
   10.13                        Promissory Note, dated July 28, 1994, by CRI in favor of Fidelity and related loan documents
                                (23200 Western Avenue) (incorporated by reference to Exhibit 10.13 to the Form 8-B).*
 
   10.14                        Promissory Note, dated August 3, 1994, by CRI in favor of Fidelity and related loan documents
                                (1661 Camelback Road) (incorporated by reference to Exhibit 10.14 to the Form 8-B).*
 
   10.15                        Guaranty Agreement, dated August 3, 1994, by Citadel in favor of Fidelity (incorporated by
                                reference to Exhibit 10.15 to the Form 8-B).*
</TABLE> 

                                      28
<PAGE>
 
<TABLE>
<CAPTION>
 
           EXHIBIT
             NO.                                                            DESCRIPTION
-----------------------------   ----------------------------------------------------------------------------------------------------
<S>                             <C>

   10.16                        Tax Disaffiliation Agreement, dated as of August 4, 1994, by and between Citadel and Fidelity
                                (incorporated by reference to Exhibit 10.16 to the Form 8-B).*
 
   10.17                        Option Agreement, dated as of August 4, 1994, by and between Fidelity and Citadel (incorporated by
                                reference to Exhibit 10.17 to the Form 8-B).*
 
   10.18                        Executive Employment Agreement, dated as of June 2, 1995, between Richard M. Greenwood and Fidelity
                                (incorporated by reference to Exhibit 10.18 to the Form 8-B).*
 
   10.19                        Amended Service Agreement between Fidelity and Citadel dated as of August 1, 1994 (incorporated by
                                reference to Exhibit 10.19 to the Form 8-B).*
 
   10.20                        Side letter, dated August 3, 1994, between Fidelity and CRI (incorporated by reference to Exhibit
                                10.20 to the Form 8-B).*
 
   10.21                        Placement Agency Agreement, dated July 12, 1994, between Fidelity, Citadel and J.P. Morgan
                                Securities Inc. (incorporated by reference to Exhibit 10.21 to the Form 8-B).*
 
   10.22                        Stock Purchase Agreement, dated as of August 3, 1994, between Fidelity and Citadel (incorporated by
                                reference to Exhibit 10.22 to the Form 8-B).*
 
   10.23                        Litigation and Judgment Assignment and Assumption Agreement, dated as of August 3, 1994, between
                                Fidelity and Citadel (incorporated by reference to Exhibit 10.23 to the Form 8-B).*
 
   10.24                        Amended and Restated 1996 Stock Option Plan

   10.25                        Retirement Plan for Non-Employee Directors (incorporated by reference to Exhibit 10.25 to the 
                                Form 8-B).*
 
   10.26                        Form of Severance Agreement between the Bank and Mr. Sanders (incorporated by reference to Exhibit
                                10.26 to the Form 8-B).*
 
   10.27                        Form of Severance Agreement between the Bank and each of Messrs. Osborne and Greenwood (incorporated
                                by reference to Exhibit 10.27 to the Form 8-B).*
 
   10.28                        Form of Severance Agreement between the Bank and each of Messrs. Condon, Evans, Stutz & Taylor
                                (incorporated by reference to Exhibit 10.28 to the Form 8-B).*
 
   10.29                        Form of Severance Agreement between the Bank and Mr. Renstrom (incorporated by reference to Exhibit
                                10.29 to the Form 8-B).*
 
   10.30                        Form of Incentive Stock Option Agreement between the Bank and certain officers (incorporated by
                                reference to Exhibit 10.30 to the Form 8-B).*
 
   10.31                        Form of Amendment to incentive Stock Option Agreement between the Bank and certain officers
                                (incorporated by reference Exhibit 10.31 to the Form 8-B).*
 
   10.32                        Form of Non-Employee Director Stock Option Agreement between the Bank and certain directors
                                (incorporated by reference to Exhibit 10.32 to the Form 8-B).*
 
   10.33                        Form of Amendment to Non-Employee Director Stock Option Agreement between the Bank and certain
                                directors (incorporated by reference to Exhibit 10.33 to the Form 8-B).*

   10.34                        Loan and REO Purchase Agreement, dated as of December 15, 1994 between Fidelity and Berkeley Federal
                                Bank & Trust FSB (incorporated by reference to Exhibit 10.34 to the Form 8-B).*
 
   10.35                        Standard Office Lease-Net, dated July 15, 1994, between the Bank and 14455 Ventura Blvd., Inc.
                                (incorporated by reference to Exhibit 10.35 to the Form 8-B).*
 
   10.36                        Standard Office Lease--Modified Gross, dated July 15, 1994, between the Bank and Citadel Realty,
                                Inc. (incorporated by reference to Exhibit 10.36 to the Form 8-B).*
 
   10.37                        Loan Servicing Purchase and Sale Agreement dated March 31, 1995 between the Bank and Western
                                Financial Savings Bank, FSB (incorporated by reference to Exhibit 10.37 to the Form 8-B).*
 
   10.38                        Supervisory Agreement dated June 28, 1995, between Fidelity and the OTS (incorporated by reference
                                to Exhibit 10.38 to the Form 8-B).*
</TABLE> 

                                       29
<PAGE>
 
<TABLE>
<CAPTION>
 
           EXHIBIT
             NO.                                                            DESCRIPTION
-----------------------------   ----------------------------------------------------------------------------------------------------
   <S>                          <C>   
   10.39                        Form of Indemnity Agreement between the Bank and its directors and senior officers (incorporated by
                                reference to Exhibit 10.39 to the Form 8-B).*
 
   10.40                        Letter from the OTS to the Bank dated December 8, 1995, terminating the Supervisory Agreement as of
                                the date of the letter (incorporated by reference to Exhibit 10.40 to the Form 8-B).*
 
   10.41                        Loan Servicing Purchase and Sale Agreement dated May 15, 1996 between Fidelity and Western Financial
                                Savings Bank (incorporated by reference to Exhibit 10.37 to the quarterly report on Form 10-Q for
                                the quarterly period ended June 30, 1996).*
 
   10.42                        First Amendment to Standard Office Lease--Modified Gross, dated as of May 15, 1995 between the Bank
                                and Citadel Realty, Inc (incorporated by reference to Exhibit 10.42 to the quarterly report on Form
                                10-Q for the quarterly period ended September 30, 1996) .*
 
   10.43                        Second Amendment to Standard Office Lease--Modified Gross, dated as of October 1, 1996, between the
                                Bank and Citadel Realty, Inc (incorporated by reference to Exhibit 10.43 to the quarterly report on
                                Form 10-Q for the quarterly period ended September 30, 1996).*
 
   10.44                        Form of Indemnity Agreement between Bank Plus and its directors and senior officers (incorporated by
                                reference to Exhibit 10.44 to the quarterly report on Form 10-Q for the quarterly period ended
                                September 30, 1996).*

   10.55                        Promissory Note, dated July 31, 1996, from Richard M. Greenwood to Bank Plus (incorporated by
                                reference to Exhibit 10.55 to the 1996 Form 10-K).*
 
   27.                          Financial Data Schedule.
-----------------------------   
</TABLE>

* Indicates previously filed documents.

  (b)  Reports on Form 8-K
       None

                                       30
<PAGE>
 
                                   SIGNATURES


  Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
<TABLE>
<CAPTION>
 
                        BANK PLUS CORPORATION
                        Registrant

<S>                     <C>
 
Date:  May 7, 1997             /s/ Richard M. Greenwood
                        --------------------------------------

                                 Richard M. Greenwood
                        President and Chief Executive Officer;
                              Vice Chairman of the Board
 
Date:  May 7, 1997              /s/ William L. Sanders
                        --------------------------------------

                                 William L. Sanders
                            Executive Vice President and
                               Chief Financial Officer
 
 
</TABLE>

                                       31