<PAGE> 1
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
[ ] 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 0-27652
REPUBLIC BANCSHARES, INC.
(Exact Name of Registrant As Specified In Its Charter)
FLORIDA 59-1463900
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
111 2nd Avenue N.E., St. Petersburg, FL 33701
(Address of Principal Office) (Zip Code)
(813) 823-7300
(Registrant's Telephone Number, Including Area Code)
- - --------------------------------------------------------------------------------
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report
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
----- -----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes No
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
<TABLE>
<S> <C>
Common stock, par value $2.00 per share 4,183,507 shares outstanding at April 30, 1997
- - --------------------------------------- ----------------------------------------------
</TABLE>
<PAGE> 2
[This page intentionally left blank]
<PAGE> 3
REPUBLIC BANCSHARES, INC.
INDEX
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
ITEM 1. FINANCIAL STATEMENTS PAGE
----
<S> <C> <C>
Consolidated Balance Sheets - March 31, 1997 (unaudited)
and December 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Consolidated Statements of Operations -
Three month period ended March 31, 1997 and 1996 (unaudited) . . . . . . . . . . . . . . . . . . . . . 2
Consolidated Statements of Stockholders' Equity -
Year ended December 31, 1996 and
three months ended March 31, 1997 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Cash Flows -
three months ended March 31, 1997 and 1996 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . 4
Notes to Consolidated Financial Statements (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . 6-8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Selected Quarterly Financial and Other Data (unaudited) . . . . . . . . . . . . . . . . . . . . . . 8-10
Comparison of Financial Condition - March 31, 1997 and
December 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Comparison of Results of Operations - Three Months ended
March 31, 1997 and 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
<PAGE> 4
REPUBLIC BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS - MARCH 31, 1997 AND DECEMBER 31, 1996
($ IN THOUSANDS, EXCEPT PAR VALUES)
<TABLE>
<CAPTION>
MARCH 31, December 31,
ASSETS 1997 1996
------ ------
(UNAUDITED)
<S> <C> <C>
Cash and due from banks $ 23,803 $ 27,810
Interest bearing deposits in banks - 118
Investment securities:
Held to maturity - -
Available for sale 42,709 74,397
Mortgage-backed securities:
Held to maturity - -
Available for sale 20,489 20,592
FHLB stock 5,081 4,830
Federal funds sold 41,000 8,000
Loans held for sale 40,201 36,590
Loans, net of allowance for loan losses (Notes 2 and 3) 694,784 693,270
Premises and equipment, net 20,015 19,715
Other real estate owned, acquired through foreclosure, net 7,250 7,363
Other assets 16,761 15,183
--------- ---------
Total assets $ 912,093 $ 907,868
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits-
Noninterest-bearing checking $ 49,066 $ 50,060
Interest checking 89,895 87,639
Money market 32,017 32,665
Savings 251,345 245,951
Time deposits 406,737 411,665
--------- ---------
Total deposits $ 829,060 $ 827,980
Securities sold under agreements to repurchase 16,160 15,372
Subordinated debt (6% rate, matures December 1, 2011) 6,000 6,000
Other liabilities 5,294 4,197
--------- ---------
Total liabilities $ 856,514 $ 853,549
--------- ---------
Stockholders' equity:
Noncumulative perpetual preferred convertible stock ($20.00 par,
100,000 shares authorized, 75,000 shares issued and outstanding.
Liquidation preference $6,600 at March 31, 1997 and December 31, 1996.) 1,500 1,500
Common stock ($2.00 par, 20,000,000 shares authorized and 4,183,507
shares issued and outstanding at March 31, 1997 and December 31, 1996) 8,367 8,367
Capital surplus 26,699 26,699
Retained earnings 19,386 17,849
Net unrealized gains (losses) on available-for-sale securities, net of tax effect (373) (96)
--------- ---------
Total stockholders' equity 55,579 54,319
--------- ---------
Total liabilities and stockholders' equity $ 912,093 $ 907,868
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
1
<PAGE> 5
REPUBLIC BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
($ IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
------------------------------------
1997 1996
---- ----
(unaudited)
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $ 16,506 $ 14,778
Interest on investment securities 486 428
Interest on mortgage-backed securities 306 291
Interest on federal funds sold 685 297
Interest on other investments 87 68
---------- ----------
Total interest income 18,070 15,862
---------- ----------
INTEREST EXPENSE:
Interest on deposits 8,662 7,879
Interest on subordinated debt 108 -
Interest on other borrowings 199 48
---------- ----------
Total interest expense 8,969 7,927
---------- ----------
Net interest income 9,101 7,935
PROVISION FOR LOAN LOSSES 1,138 450
---------- ----------
Net interest income after
provision for possible loan losses 7,963 7,485
---------- ----------
NONINTEREST INCOME:
Service charges on deposit accounts 438 376
Loan fee income 125 125
Income from mortgage banking activities 898 -
Gain (loss) on sale of loans, net 1,188 (11)
Gain on sale of securities, net 42 4
Other operating income 433 184
---------- ----------
Total noninterest income 3,124 678
NONINTEREST EXPENSES:
General and administrative ("G&A") expenses 8,240 5,956
Provision for losses on ORE 170 180
Other ORE (income) expense (13) 1
Amortization of premium on deposits 123 123
---------- ----------
Total noninterest expenses $ 8,520 $ 6,260
---------- ----------
Income (loss) before income taxes 2,567 1,903
Income tax provision 964 699
---------- ----------
NET INCOME $ 1,603 $ 1,204
========== ==========
PER SHARE DATA:
Net income per common and common
equivalent share $ .32 $ .24
========== ==========
Weighted average common and common
equivalent shares outstanding $4,980,167 $4,953,119
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
2
<PAGE> 6
REPUBLIC BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1996 AND
THE THREE MONTHS ENDED MARCH 31, 1997
($ IN THOUSANDS)
<TABLE>
<CAPTION>
Perpetual Preferred Net Unrealized
Convertible Stock Common Stock Gains (Losses)
------------------- ------------------ on Available
Shares Shares Capital Retained for Sale
Issued Amount Issued Amount Surplus Earnings Securities Total
------ ------ ------ ------ ------- -------- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1995 75,000 $1,500 4,183,507 $8,367 $26,699 $14,329 $ 8 $50,903
Net income for the twelve
months ended December 31,
1996 - - - - - 3,784 - 3,784
Net unrealized losses on
available-for-sale securities - - - - - - (104) (104)
Dividends on preferred
stock - - - - - (264) - (264)
------- ------ ---------- ------ ------- ------- ----- -------
BALANCE, DECEMBER 31, 1996 75,000 1,500 4,183,507 8,367 26,699 17,849 (96) 54,319
Net income for the three
months ended March 31,
1997 - - - - - 1,603 - 1,603
Net unrealized losses on
available-for-sale securities - - - - - - (277) (277)
Dividends on preferred
stock - - - - - (66) - (66)
------- ------ ---------- ------ ------- ------- ----- -------
BALANCE, MARCH 31, 1997 75,000 $1,500 $4,183,507 $8,367 $26,699 $19,386 $(373) $55,579
======= ====== ========== ====== ======= ======= ===== =======
</TABLE>
The accompanying notes are an integral part of these consolidated statements
3
<PAGE> 7
REPUBLIC BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
1997 1996
---- ----
(unaudited) (unaudited)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 1,603 $ 1,204
Reconciliation of net income to net cash provided by (used in):
Provision for losses on loans and ORE 1,308 450
Depreciation and amortization, net (259) (66)
Amortization of premium and accretion of fair value 289 131
(Gain) loss on sale of loans (2,086) 11
(Gain) on sale of investment securities (42) (4)
(Gain) loss on sale of ORE (108) 10
Capitalization of mortgage servicing (839) 15
Net increase in deferred tax benefit (897) (114)
Gain on disposal of premises & equipment (1) -
Net (increase) decrease in other assets (205) (4,963)
Net increase (decrease) in other liabilities 1,098 (649)
-------- --------
Net cash provided by (used in) operating activities (139) (3,975)
-------- --------
INVESTING ACTIVITIES:
Net (increase) decrease in interest bearing deposits in banks 118 (9)
Proceeds from sales & maturities of:
Investment securities held to maturity - 7,000
Investment securities available for sale 68,447 25,006
Purchase of securities available for sale (36,815) (18,030)
Principal repayment on mortgage backed securities 93 749
Purchase of FHLB stock (251) (1,290)
Net increase in loans (4,431) (10,160)
Purchase of premises and equipment (696) (206)
Proceeds from sale of ORE 844 439
(Investments) disposals in other real estate owned (net) 21 -
-------- --------
Net cash provided by (used in) investing activities 27,330 3,499
-------- --------
FINANCING ACTIVITIES:
Net increase (decrease) in deposits 1,081 (1,022)
Net increase (decrease) in repurchase agreements 787 1,344
Dividends on perpetual preferred stock (66) (66)
-------- --------
Net cash provided by (used in) financing activities 1,802 256
-------- --------
Net increase (decrease) in cash and
cash equivalents 28,993 (220)
Cash and cash equivalents, beginning of period 35,810 34,427
-------- --------
Cash and cash equivalents, end of period $ 64,803 $ 34,207
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for-
Interest $ 8,607 $ 6,868
Income taxes 531 865
</TABLE>
The accompanying notes are an integral part of these consolidated statements
4
<PAGE> 8
REPUBLIC BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation and Organization
Republic Bancshares, Inc. (the "Company") is a bank holding company organized
in March 1996 under the laws of the State of Florida and is the holding company
for Republic Bank (the "Bank"). In connection with the reorganization which
resulted in the Company becoming the holding company for the Bank, the Company
became the owner of all of the outstanding capital stock of the Bank. The
Company does not currently conduct any activities other than its ownership and
operation of the Bank.
The Bank is a state-chartered, federally-insured commercial bank organized in
1972 and providing a full range of retail and commercial banking products and
related financial services. The Bank's headquarters are in St. Petersburg,
Florida. Its principal business is attracting checking, savings and time
deposits from the public and general business customers and using these
deposits to originate residential mortgages, commercial real estate mortgages,
business loans, and consumer loans. The Bank opened an office in Spring Hill,
Florida, in January 1997 bringing the total to 33 branch banking offices
located in Hernando, Pasco, Pinellas, Manatee and Sarasota counties. There are
also eight residential and two commercial loan production offices in Florida
and one residential loan production office in Boston, Massachusetts. The Bank
is the largest independent financial institution headquartered on the west
coast of Florida.
The FASB has issued SFAS No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishment of Liabilities", which is effective for the
Bank's fiscal year beginning January 1, 1997. SFAS 125 provides standards for
distinguishing transfers of financial assets that are sales from transfers that
are secured borrowings. The impact of the adoption of SFAS 125 upon the
results of operations of the Company was not material.
In February 1997, the FASB issued SFAS No. 128, "Earnings per Share", which is
effective for the Company's fourth quarter and year ended December 31, 1997.
Early application is not permitted and after the effective date, prior period
earnings per share presented must be restated. SFAS No. 128 establishes new
standards for computing and presenting EPS. Specifically, SFAS No. 128
replaces the presentation of primary earnings per share with basic earnings per
share, requires dual presentation for companies with complex capital structures
of basic and diluted earnings per share and requires a reconciliation of the
numerator and denominator of the basic earnings per share computation to those
of the diluted earnings per share computation. Management has not determined
the effect of the adoption of SFAS No. 128 on the Company's financial
statements, but does not expect it to be material.
These consolidated financial statements should be read in conjunction with the
financial statements and the notes thereto included in the Company's Annual
Report for the year ended December 31, 1996, filed with the Securities and
Exchange Commission ("SEC") on Form 10-K. The results of the three months
ended March 31, 1997 are not necessarily indicative of the results to be
expected for the fiscal year ending December 31, 1997.
5
<PAGE> 9
2. LOANS AND LOANS HELD FOR SALE:
Loans at March 31, 1997 and December 31, 1996, are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
------ ------
<S> <C> <C>
Real estate mortgage loans:
One-to-four family residential $372,498 $383,015
Multifamily residential 67,531 68,337
Commercial real estate 192,509 182,298
Construction/land development 29,812 27,050
Commercial loans 33,126 34,427
Consumer loans 11,747 9,983
Other loans 1,069 1,294
-------- --------
Total gross portfolio loans 708,292 706,404
Less-allowance for loan losses 13,508 13,134
-------- --------
Total loans held for portfolio 694,784 693,270
Loans held for sale 40,201 36,590
-------- --------
Total loans $734,985 $729,860
======== ========
</TABLE>
As of March 31, 1997 and December 31, 1996 loans available for sale, primarily
one-to-four family residential mortgages, had weighted average interest rates
of 9.05% and 8.72%, respectively. Mortgage loans serviced for others as of
March 31, 1997 and December 31, 1996 were $141,980,000 and $120,711,000,
respectively.
3. ALLOWANCES FOR LOSSES:
Allowance for Loan Losses:
The allowance for loan losses provides for risks of losses inherent in the
credit extension process. Losses are charged to the allowance for loan losses
and recoveries are credited to the allowance. The Company's allowance is an
amount that management believes will be adequate to absorb possible losses on
existing loans that may become uncollectible, based on evaluations of the
collectibility of loans and prior loan loss experience. The evaluations take
into consideration such factors as changes in the nature and volume of the loan
portfolio, overall portfolio quality, review of specific problem loans, and
current economic conditions that may affect the borrower's ability to pay. The
evaluations are periodically reviewed and adjustments are recorded in the
period in which changes become known.
As part of the risk assessment for purchased loans, management has
allocated a portion of the discount on such loan purchases to the allowance
for loan losses in amounts consistent with the Company's loan loss policy
guidelines. Amounts added to the allowance for loan losses resulting from
discount allocation are available to absorb potential losses only for those
purchased loans and are not available for losses from other loan
portfolios. To the extent that losses in certain pools or portfolios of
loans exceed the allowance for loan losses and any remaining unamortized
loan discount allocated to such pool or portfolio, or available as a
general allowance, the Company would have to recognize a loss to the
extent of such shortfall in the then current period. During the first
quarter of 1997, management sold $6,005,000 of loans purchased and
transferred $642,000 of the amount originally allocated to the allowance
for purchased loans into the allocation for originated loans. After this
transfer was completed and taking into consideration loan loss provisions,
charge-offs and recoveries for the first quarter of 1997 the allowance for
loan losses was comprised of $7,089,000 allocated to originated loans and
$6,419,000 allocated to the various pools of purchased loans.
Additionally, as of March 31, 1997, the balance of loan discounts
available to absorb losses on pools or portfolios of purchased loans
exceeding amounts transferred to the allowance amounted to $4,119,000.
Loans on which interest was not being accrued totaled $16,191,000 and
$15,351,000 at March 31, 1997 and December 31, 1996, respectively. Loans
past due 90 days or more and still accruing interest at March 31, 1997 and
December 31, 1996, totaled $122,000 and $113,000, respectively.
6
<PAGE> 10
Changes in the allowance for loan losses were as follows (in thousands):
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
1997 1996
---- ----
<S> <C> <C>
Balance, beginning of period $13,134 $14,910
Provision for loan losses 1,138 450
Allowance for loan losses
on purchased loans transferred
to discount (includes amounts
taken to income on loans sold) (642) (30)
Loans charged off (188) (649)
Recoveries of loans charged off 66 65
------- -------
Balance, end of period $13,508 $14,746
======= =======
</TABLE>
Allowance for Losses on Other Real Estate ("ORE"):
The Company recognizes any estimated potential decline in the value of ORE
between appraisal dates through periodic additions to the allowance for losses
on ORE. Writedowns charged against this allowance are taken if the related
real estate is sold at a loss. For the three months ended March 31, 1997, the
Company had recorded a provision expense for losses on ORE of $170,000.
Included in the ORE balance is a tract of land carried at $3,200,000 acquired
through foreclosure in 1988 that has partially been developed as a shopping
center site. Federal law and regulations require the Company to dispose of
this tract by December 31, 1997.
2. SUBSEQUENT EVENT
Effective April 21, 1997, the Company acquired all of the outstanding common
stock of EHL Holdings, Inc., the privately- held parent company of First
Financial, F.A., a thrift headquartered in Orlando, Florida with total assets
at acquisition of $71,147,000. The thrift subsidiary of EHL Holdings, Inc. was
simultaneously merged into the Bank. The purchase price paid was a cash amount
of $5,501,000 and goodwill of $1,366,000 was recorded. That goodwill will be
amortized over a period of 48 months.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Selected Consolidated Financial Data
The following selected consolidated operating data, per share data, balance
sheet data and selected financial ratios as of and for each of the preceding
eight consecutive quarters are derived from unaudited consolidated financial
statements. Financial data for those interim periods include all adjustments,
consisting of normal accruals, that the Company's management considers
necessary for a fair presentation of the Company's financial condition and
results of operations for such interim periods.
7
<PAGE> 11
SELECTED QUARTERLY FINANCIAL AND OTHER DATA
EIGHT CONSECUTIVE QUARTERS (UNAUDITED)
($ IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Quarters Ending
------------------------------------------------------
March 1997 Dec. 1996 Sept. 1996 June 1996
---------- --------- ----------- ---------
<S> <C> <C> <C> <C>
OPERATING DATA:
Interest income $ 18,070 $ 18,423 $ 16,725 $ 15,937
Interest expense 8,969 8,722 8,455 7,822
---------- ---------- ----------- ----------
Net interest income 9,101 9,701 8,270 8,115
Loan loss provision 1,138 450 450 450
---------- ---------- ----------- ----------
Net interest income after loan loss provision 7,963 9,251 7,820 7,665
Noninterest income 3,124 1,610 1,113 988
General and administrative ("G&A") expenses 8,240 8,167 6,867 6,342
Other noninterest expense 280 261 2,449 248
---------- ---------- ----------- ----------
Net income (loss) before income taxes & negative goodwill 2,567 2,433 (383) 2,063
Accretion of negative goodwill - - - -
---------- ---------- ----------- ----------
Net income before income taxes 2,567 2,433 (383) 2,063
Income tax provision (benefit) 964 920 (181) 794
---------- ---------- ----------- ----------
Net income (loss) $ 1,603 $ 1,513 $ (202) $ 1,269
========== ========== =========== ==========
PER SHARE DATA (FULLY-DILUTED, NET OF TAX EFFECT):
Core net income (1) $ .34 $ .32 $ .26 $ .29
SAIF Special Assessment - - (.32) -
Provision for losses on ORE (.02) (.02) (.13) (.03)
Gain on sale of building - - .15 -
Accretion of negative goodwill - - - -
---------- ---------- ----------- ----------
Net income $ .32 $ .30 $ (.04) $ .26
========== ========== =========== ==========
Weighted average shares outstanding 4,980,167 4,968,199 4,951,301 4,954,555
BALANCE SHEET DATA (AT PERIOD-END):
Total assets $ 912,093 $ 907,868 $ 852,478 $ 835,005
Investment & mortgage backed securities 63,198 94,989 46,562 44,104
Loans, net of unearned income 748,493 742,994 721,892 698,240
Allowance for loan losses 13,508 13,134 14,776 14,608
Deposits 829,060 827,980 783,188 765,936
Negative goodwill - - - -
Stockholders' equity 55,579 54,319 52,934 53,214
SELECTED FINANCIAL RATIOS:
Return on average assets-total .72% .69% (.09)% .63 %
Return on average assets-adjusted (2) .72 .69 .65 .63
Return on average equity-total 12.10 11.44 (1.53) 9.93
Return on average equity-adjusted (2) 12.10 11.44 10.47 9.93
Net interest spread 3.83 4.34 3.77 3.92
Net interest margin 4.12 4.66 4.08 4.21
G&A expense to average assets (3) 3.63 3.71 3.24 2.98
G&A efficiency ratio (3) 67.40 72.18 73.19 69.68
Non-accrual loans to total loans 2.27 2.15 2.33 2.24
Nonperforming assets to total assets 2.58 2.50 3.14 3.13
Allowance for loan loss to total loans 1.91 1.86 2.05 2.09
Allowance for loan loss to non-performing loans 82.81 85.94 81.46 85.06
OTHER DATA (AT PERIOD-END):
Number of branch banking offices 33 32 32 32
Number of full-time equivalent employees 644 637 591 534
</TABLE>
- - --------------------------------------------------------------------------------
(1) Excludes the effect of the non-recurring SAIF Special Assessment,
provisions for losses on ORE, the gain on sale of the former headquarters
building, and accretion of negative goodwill, where applicable.
(2) Adjusted returns on assets and equity exclude the SAIF Special Assessment
and negative goodwill accretion.
(3) Excludes the SAIF Special Assessment.
8
<PAGE> 12
SELECTED QUARTERLY FINANCIAL AND OTHER DATA
EIGHT CONSECUTIVE QUARTERS (UNAUDITED)
($ IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Quarters Ending
------------------------------------------------------
March 1996 Dec. 1995 Sept. 1995 June 1995
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
OPERATING DATA:
Interest income $ 15,862 $ 15,901 $ 14,842 $ 14,629
Interest expense 7,927 8,051 7,794 7,776
---------- ---------- ---------- ----------
Net interest income 7,935 7,850 7,048 6,853
Loan loss provision 450 275 330 540
---------- ---------- ---------- ----------
Net interest income after loan loss provision 7,485 7,575 6,718 6,313
Noninterest income 678 747 647 696
G&A expenses 5,955 6,388 5,509 5,381
Other noninterest expense 305 (6) 389 200
---------- ---------- ---------- ----------
Net income before income taxes & negative goodwill 1,903 1,940 1,467 1,428
Accretion of negative goodwill - - 225 676
---------- ---------- ---------- ----------
Net income before income taxes 1,903 1,940 1,692 2,104
Income tax provision 699 694 424 368
---------- ---------- ---------- ----------
Net income $ 1,204 $ 1,246 $ 1,268 $ 1,736
========== ========== ========== ==========
PER SHARE DATA (FULLY-DILUTED, NET OF TAX EFFECT):
Core net income (1) $ .26 $ .25 $ .21 $ .25
SAIF Special Assessment - - - -
Provision for losses on ORE (.02) - - -
Gain on sale of building - - - -
Accretion of negative goodwil - - .05 .16
---------- ---------- ---------- ----------
Net income $ .24 $ .25 $ .26 $ .41
========== ========== ========== ==========
Weighted average shares outstanding 4,953,229 4,954,555 4,961,541 4,187,722
BALANCE SHEET DATA (AT PERIOD-END):
Total assets $ 802,363 $ 801,995 $ 758,739 $ 764,072
Investment securities 51,481 64,801 47,635 49,823
Loans, net of unearned income 676,658 699,416 633,908 599,964
Allowance for loan losses 14,746 14,910 14,641 14,543
Deposits 742,082 743,105 703,237 708,676
Negative goodwill - - - 225
Stockholder's equity 52,047 50,903 49,706 48,502
SELECTED FINANCIAL RATIOS:
Return on average assets .60 % .62 % .66 % .92 %
Return on average assets-adjusted (2) .60 .62 .54 .56
Return on average equity 9.57 10.07 10.45 18.33
Return on average equity-adjusted (2) 9.57 10.07 8.59 11.22
Net interest spread 3.83 3.84 3.59 3.58
Net interest margin 4.14 4.17 3.91 3.83
G&A expense to average assets (3) 2.96 3.22 2.89 2.84
G&A efficiency ratio (3) 68.84 74.30 71.59 71.27
Non-accrual loans to total loans 2.24 2.02 2.43 2.21
Nonperforming assets to total assets 3.02 2.93 3.19 2.83
Allowance for loan loss to total loans 2.18 2.23 2.31 2.42
Allowance for loan loss to non-performing loans 96.47 90.47 84.53 99.54
OTHER DATA (AT PERIOD-END):
Number of branch offices 32 32 32 28
Number of full-time equivalent employees 436 421 403 366
</TABLE>
- - --------------------------------------------------------------------------------
(1) Excludes the effect of the non-recurring SAIF Special Assessment,
provisions for losses on ORE, the gain on sale of the former headquarters
building, and accretion of negative goodwill, where applicable.
(2) Adjusted returns on assets and equity exclude the SAIF Special Assessment
and negative goodwill accretion.
(3) Excludes the SAIF Special Assessment.
9
<PAGE> 13
COMPARISON OF BALANCE SHEETS AT MARCH 31, 1997 AND DECEMBER 31, 1996
Overview
Total assets of Republic Bancshares, Inc. (the "Company"), the parent company
of Republic Bank (the "Bank") were $912,093,000 at March 31, 1997 and
$907,868,000 at December 31, 1996, an increase of $4,225,000. Total loans
increased by $5,499,000 from $742,994,000 at the end of the prior year to
$748,493,000 at the end of the first quarter. Total deposits increased by
$1,080,000 from $827,980,000 at year-end 1996 to $829,060,000.
Investment and Mortgage-Backed Securities
Investment and mortgage-backed securities, consisting primarily of U.S.
Treasury and federal agency securities, were $62,198,000 at March 31, 1997
compared to $94,989,000 at December 31, 1996, a decrease of $31,791,000.
During the first three months of 1997 management permitted the amount in this
category to decline by allowing maturities and sales to exceed purchases.
Concurrently, federal funds sold, all on an overnight basis, increased by
$33,000,000 from $8,000,000 at the prior year-end to $41,000,000 at March 31,
1997. At March 31, 1997, the Company had recorded all its investment and
mortgage-backed securities in the "available for sale" category which are
included in the Company's financial position at their period-end market value.
Loans and Loans Held for Sale
Total loans increased $5,499,000 from $742,994,000 at year-end to $748,493,000
at March 31, 1997. This increase was the result of new loan production during
the first quarter, of $108,396,000, which exceeded loan repayments of
$16,919,000 and $85,978,000 in residential loan sales. Residential loans,
including $40,201,000 in mortgage loans held for sale, declined $7,788,000 to
$398,113,000, while other real estate-secured loans increased $5,262,000.
Consumer loans also increased $1,764,000 while commercial (business) loans
declined $1,301,000.
Allowance for Loan Losses
The allowance for loan losses amounted to $13,508,000 at March 31, 1997 (1.80%
of total loans), compared to $13,134,000 at December 31, 1996. The loan
portfolio includes purchased loans amounting to $271,235,000 (36.2% of total
loans) and the Company has allocated a portion of the discount on those
purchases to the allowance for loan losses in amounts consistent with the
Company's loan loss policy guidelines. At March 31, 1997, the allowance for
loan losses included $3,713,000 allocated to the Company's largest purchase
made in March 1995 (the "March Purchase"), $1,043,000 allocated to loans
purchased from CrossLand, $1,663,000 allocated to other loan purchases, and
$7,089,000 allocated to loans originated by the Bank. Activity to the
allowance for loan losses during the first quarter of 1997 included a
$1,138,000 provision for loan losses and loan charge-offs (net of recoveries)
of $121,000. During the first quarter, the Company sold $6,005,000 million of
loans from the March Purchase and subsequently reallocated $642,000 from the
allowance allocated for the March Purchase to the amount allocated for
originated loans. This transfer was accomplished by recording a gain on sale
of loans and an increase in the loan loss provision of equivalent amounts.
Discounts on loan purchases not allocated to the allowance for loan losses
amounted to $4,119,000 at March 31, 1997. Such discounts are available to
absorb losses on pools of purchased loans should amounts allocated to the
allowance prove insufficient.
Nonperforming Assets
Nonperforming assets amounted to $23,563,000 or 2.58% of total assets at March
31, 1997, as compared to $22,645,000 or 2.50% of total assets at December 31,
1996. Nonperforming loans totaled $16,313,000 at the end of the first quarter,
an increase of $1,031,000 from the year-end total of $15,282,000. This was the
result of increases of $904,000 in nonperforming residential loans, and
$718,000 in nonperforming commercial
10
<PAGE> 14
(business) loans, partially offset by decreases of $468,000 in nonperforming
commercial real estate loans and $123,000 in nonperforming consumer loans.
Other real estate acquired through foreclosure declined by $113,000 from
$7,363,000 at the end of the prior year to $7,250,000 at the end of the first
quarter.
Deposits
Total deposits were $829,060,000 at March 31, 1997, compared to $827,980,000 at
December 31, an increase of $1,080,000. Passbook savings accounts offered to
higher balance customers at a premium rate increased by $4,165,000 and other
savings accounts increased by $1,229,000. Interest bearing and non-interest
bearing checking account balances remained relatively unchanged from the prior
year-end increasing by only $168,000, while certificates of deposit declined by
$4,928,000.
Stockholders' Equity
Stockholders' equity was $55,579,000 at March 31, 1997, or 6.1% of total assets
compared to $54,319,000 or 6.0% of total assets at December 31, 1996. At March
31, 1997, the Company's Tier 1 ("Leverage") Capital ratio was 5.83%, its Tier 1
Risk-Based Capital ratio was 8.87%, and the Total Risk-Based Capital ratio was
11.12%, all in excess of minimum regulatory guidelines for an institution to be
considered "well-capitalized". The Bank's regulatory capital levels were
slightly higher than that of the Company at 6.47% for its Tier 1 ("Leverage")
ratio, 9.85% for its' Tier 1 Risk-Based Capital ratio, and 11.09% for its Total
Risk-Based Capital ratio.
COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1997
AND 1996
Overview
Net income for the first quarter of 1997 was $1,603,000 or $.32 per share,
compared to $1,204,000 or $.24 per share for the same period of 1996, an
improvement of $399,000 for the three month period. The Company's return on
average assets and return on average equity also improved to 0.72% and 12.10%,
respectively, for the first quarter of 1997 compared to 0.60% and 9.57%,
respectively, for the first quarter of 1996.
Analysis of Net Interest Income (see table on page 13)
Net interest income for the first quarter of 1997 was $9,101,000 compared to
$7,935,000 for 1996. This $1,166,000 or 14.7% increase was primarily the
result of additional income from balance sheet growth as total interest-earning
assets increased by approximately $55,114,000. Interest income was $18,070,000
for the three months ended March 31, 1997, an increase of $2,208,000 over 1996
while interest expense increased by $1,042,000. The average asset yield and
the average cost of interest-bearing liabilities remained level at 8.36% and
4.53%, respectively. As a result, net interest spread for the first quarter of
1997 and 1996 was unchanged at 3.83% and net interest margin, which includes
the benefit of noninterest bearing funds, decreased from 4.14% for 1996 to
4.12% for 1997.
11
<PAGE> 15
The following table summarizes the average yields earned on interest-earning
assets and the average rates paid on interest-bearing liabilities for the three
months ended March 31, 1997 and 1996 (in thousands):
<TABLE>
<CAPTION>
Three Months Ended March 31,
-------------------------------------------------------------------------
1997 1996
----------------------------------- ---------------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
------- -------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Summary of Average Rates
- - ------------------------
Interest earning assets:
Loans, net $ 745,893 $ 16,506 8.77% $ 677,439 $ 14,778 8.68%
Investment securities 33,749 486 5.83 32,275 428 5.34
Mortgage backed securities 19,962 306 6.12 20,403 291 5.71
Interest bearing deposits in banks 118 - 5.49 43 - 3.67
FHLB stock 4,869 87 7.25 3,695 68 7.28
Federal funds sold 52,950 685 5.17 21,743 297 5.40
--------- --------- --------- ---------
Total interest-earning assets 857,541 18,070 8.36 755,598 15,862 8.36
Non interest-earning assets 49,507 46,291
--------- ---------
Total assets $ 907,048 $ 801,889
========= =========
Interest-bearing liabilities:
Interest checking $ 88,679 240 1.10 $ 77,552 254 1.32
Savings 27,082 137 2.05 29,322 159 2.17
Passbook gold 221,023 2,649 4.86 70,735 766 4.36
Money market 33,007 165 2.03 39,709 219 2.22
Time deposits 410,499 5,471 5.40 482,125 6,481 5.41
Subordinated debt 6,000 108 7.17 - - -
Other borrowings 16,137 199 5.01 4,357 48 4.40
--------- --------- --------- ---------
Total interest-bearing liabilities 802,427 8,969 4.53 703,800 7,927 4.53
Non interest-bearing liabilities 50,910 47,658
Stockholders' equity 53,711 50,431
--------- ---------
Total liabilities and equity $ 907,048 $ 801,889
========= =========
Net interest income &
net interest spread $ 9,101 3.83% $ 7,935 3.83%
========= ==== ========= ====
Net interest margin 4.12% 4.14%
==== ====
</TABLE>
<TABLE>
<CAPTION>
Increase (Decrease) Due to (1)
------------------------------
Changes in Net Interest Income Volume Rate Total
- - ------------------------------ ------ ---- -----
<S> <C> <C> <C>
Interest earning assets:
Loans, net $ 1,428 $ 300 $ 1,728
Investment securities 28 30 58
Mortgage backed securities (6) 21 15
Interest bearing deposits in banks - - -
FHLB stock 21 (2) 19
Federal funds sold 401 (13) 388
-------- ------- -------
Total change in interest income 1,872 336 2,208
Interest-bearing liabilities:
Interest checking 31 (45) (14)
Savings (14) (8) (22)
Passbook gold 1,786 97 1,883
Money market (37) (17) (54)
Time deposits (845) (165) (1,010)
Subordinated debt 108 - 108
Other borrowings 138 13 151
-------- ------- -------
Total change in interest expense 1,167 (125) 1,042
-------- ------- -------
Increase (decrease) in net interest income $ 705 $ 461 $ 1,166
======== ======= =======
</TABLE>
- - ------------------------
(1) Changes in net interest income due to changes in volume and rate are
based on absolute values.
12
<PAGE> 16
Noninterest Income
Noninterest income for the first quarter of 1997 was $3,124,000 compared to
$678,000 for the same period in 1996, an increase of $2,446,000. Of the
increase, $898,000 was the result of increased income from mortgage banking
operations, principally gains on sale of loans, net of certain capitalized
costs of production. Gains on sale of loans in portfolio amounted to
$1,188,000 for the first quarter of 1997. Other improvements included $93,000
from a fee-based checking account program under the name "Generations Gold" and
an increase of $62,000 in other sources of fee income on deposit accounts.
The following table reflects the components of noninterest income for the three
months ended March 31, 1997 and 1996 (in thousands):
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
------------------------------------------------
Increase
1997 1996 (Decrease)
------ ------ ----------
<S> <C> <C> <C>
Service charges on deposit accounts 438 $ 376 $ 62
Loan fee income 125 125 -
Income from mortgage banking activities 898 - 898
Gains on sales of portfolio loans 1,188 (11) 1,199
Other income 284 154 130
Gain on sale of investments 43 4 39
Generations Gold fee income 100 7 93
Merchant charge card processing fees 48 23 25
Other income 284 154 130
------- ------ -------
Total noninterest income $ 3,124 $ 678 $ 2,446
======= ====== =======
</TABLE>
Noninterest Expense
- - -------------------
General and administrative ("G&A") expenses for the first quarter of 1997 were
$8,240,000 compared to $5,956,000, an increase of $2,284,000. The major factor
responsible for the expense increase was the expansion of the Company's
residential lending operations which added 122 new employees and increased G&A
by $1,246,000. The remaining increase in expense is primarily attributable to
the general growth of the Company which has increased staffing levels in other
areas from 432 employees at March 31, 1996 to 522 employees (excluding the
mortgage banking operation) at March 31, 1997. Total noninterest expenses,
which include G&A expense, provisions for losses on ORE properties, ORE income
and expense, and amortization of premiums paid on deposits, were $8,520,000 for
the first quarter of 1997 compared to $6,260,000 for the same period last year.
The following table reflects the components of noninterest expense for the
three months ended March 31, 1997 and 1996 (in thousands):
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
---------------------------------------------------
Increase
1997 1996 (Decrease)
------ ------ ----------
<S> <C> <C> <C>
Salaries and benefits $ 4,366 $ 3,253 $ 1,113
Net occupancy expense 1,284 1,025 259
Advertising 209 80 129
Data processing fees 391 317 74
FDIC and state assessments 127 270 (143)
Telephone expense 251 125 126
Legal and professional 248 106 142
Postage and supplies 336 229 107
Other operating expense 1,028 551 477
------- ------- -------
G & A expenses 8,240 5,956 2,284
Provision for losses on ORE 170 180 (10)
ORE expense, net of ORE income (13) 1 (14)
Amortization of premium on deposits 123 123 -
------- ------- -------
Total noninterest expense $ 8,520 $ 6,260 $ 2,260
======= ======= =======
</TABLE>
13
<PAGE> 17
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is party to various legal proceedings in the ordinary
course of its business. Based on information presently available,
management does not believe that the ultimate outcome in such
proceedings, in the aggregate, would have a material adverse effect
on the Company's financial position or results of operation.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
27.0 Financial Data Schedule
b. Reports on Form 8-K
There were no reports on Form 8-K filed during the three months
ended March 31, 1997.
14
<PAGE> 18
Pursuant to the requirements of Section 13 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.
REPUBLIC BANCSHARES, INC.
Date: May 12, 1997 By: /s/ John W. Sapanski
-----------------------------
John W. Sapanski
Chairman and Chief Executive
Officer (principal executive
officer)
Date: May 12, 1997 By: /s/ William R. Falzone
-----------------------------
William R. Falzone
Treasurer (principal
financial and accounting
officer)
15
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATION
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 23,803
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 41,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 62,370
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 748,493
<ALLOWANCE> 13,508
<TOTAL-ASSETS> 912,093
<DEPOSITS> 829,060
<SHORT-TERM> 16,160
<LIABILITIES-OTHER> 5,294
<LONG-TERM> 6,000
0
1,500
<COMMON> 8,367
<OTHER-SE> 45,712
<TOTAL-LIABILITIES-AND-EQUITY> 912,093
<INTEREST-LOAN> 16,506
<INTEREST-INVEST> 1,564
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 18,070
<INTEREST-DEPOSIT> 8,662
<INTEREST-EXPENSE> 8,969
<INTEREST-INCOME-NET> 9,101
<LOAN-LOSSES> 1,138
<SECURITIES-GAINS> 42
<EXPENSE-OTHER> 8,520
<INCOME-PRETAX> 2,567
<INCOME-PRE-EXTRAORDINARY> 2,567
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,603
<EPS-PRIMARY> .32
<EPS-DILUTED> .32
<YIELD-ACTUAL> 8.36
<LOANS-NON> 16,305
<LOANS-PAST> 122
<LOANS-TROUBLED> 2,503
<LOANS-PROBLEM> 1,870
<ALLOWANCE-OPEN> 13,134
<CHARGE-OFFS> 188
<RECOVERIES> 66
<ALLOWANCE-CLOSE> 13,508
<ALLOWANCE-DOMESTIC> 13,508
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 13,508
</TABLE>
