CHICAGO, Nov. 21 /PRNewswire/ -- Fidelity Bancorp, Inc. (Nasdaq: FBCI)
announced today that it is evaluating information that was recently disclosed
by Reliance Acceptance Group, Inc. ("RACC"), formerly known as Cole Taylor
Financial Group, Inc., to decide whether accounting adjustments should be made
with respect to certain RACC subordinated notes that the Company holds in its
investment portfolio (the "Notes").
    In a Form 10-Q that RACC filed with the SEC Friday, November 14, 1997,
RACC disclosed that RACC's financial condition "... continued to deteriorate
during the third quarter of 1997, and has worsened from that date to the
present time."  In a press release issued on November 18, 1997, Duff & Phelps
Credit Rating Co. announced that it had downgraded its rating on the Notes
from "B-" (Single-B-Minus) to "CCC" (Triple C).  Reference should be made to
RACC's Form 10-Q for the quarterly period ended September 30, 1997, and also
the additional information that RACC disclosed at a press conference on
November 18, 1997, for more detailed information concerning these
developments.
    The Notes, purchased May 24, 1994, have a par value and cost basis of $3.0
million.  The Notes are presently on accrual status and scheduled payments
have been made to date in accordance with the terms of the Notes.  The Notes
are carried on the Company's books as "available for sale" securities with an
estimated fair market value of $2.4 million at June 30, 1997, and $2.25
million at September 30, 1997.  To date, these reductions in value have been
considered to be a temporary impairment and thus, in accordance with generally
accepted accounting principles, have not been charged against the Company's
earnings.
    The Company is evaluating RACC's recent disclosures and is attempting to
obtain additional information about RACC's present circumstances and future
prospects to decide whether the impairment should continue to be treated as
temporary.  If the Company decides, prior to the filing of its Form 10-K for
the fiscal year ended September 30, 1997, that the impairment is other than
temporary, it would be required to revise its earnings for fiscal year 1997
and the fourth quarter to reflect the amount of any write-down on the Notes.
The extent of any write-down would depend on the Company's valuation of the
Notes based upon then available information.
    Based upon information available to date, the level of any write-down
could be material to the unaudited preliminary earnings that were reported by
the Company for the fiscal year and quarter ended September 30, 1997, in its
press release dated October 20, 1997.  Such earnings were reported to be
$3.945 million, or $1.38 per share on a fully diluted basis, for fiscal year
1997, and did not reflect any write-down of the Notes.  Stockholder's equity,
as reported in the same press release, was $52.2 million, which includes a
$750,000 unrealized loss on the Notes.
    The Company is also consulting with its professional advisors to consider
the legal implications of a transaction consummated earlier this year pursuant
to which Cole-Taylor Bank was "spun-off" as a subsidiary of RACC, changing the
Notes from an investment in a bank holding company with bank and finance
company subsidiaries to an investment in a finance company.
    Fidelity Bancorp, Inc. is the holding company for Fidelity Federal Savings
Bank, which provides retail banking services through five full-service
locations in Chicago, Franklin Park and Schaumburg.  Fidelity's stock is
traded on the Nasdaq National Market System under the symbol "FBCI."
    Fidelity Bancorp Inc.'s news releases are available through PR Newswire's
Company News On-Call fax service.  For a menu, or to receive a specific
release, call 800-758-5804, ext. 107861, or visit http://www.prnewswire.com on
the Internet.

Link to this page: