- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
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: 0-23643
REPUBLIC BANKING CORPORATION OF FLORIDA
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 59-1318959
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION)
2800 PONCE DE LEON BLVD., CORAL GABLES, FLORIDA 33134
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER: (305) 774-5197
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 ____
The number of shares outstanding of the registrant's common stock as of
April 30, 1999 was 21,230,892
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<PAGE>
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION:
Item 1. Consolidated Financial Statements and Condensed Notes to Consolidated
Financial Statements (unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
PART II - OTHER INFORMATION:
Item 2. Changes in Securities and Use of Proceeds
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
PART I.
ITEM 1.
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
----------- ------------
1999 1998
- --------------------------------------------------------------------------------------------
(UNAUDITED)
-----------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Cash and cash equivalents:
Cash and due from banks ................................. $ 44,765 $ 48,296
Federal funds sold ...................................... 36,001 23,705
- --------------------------------------------------------------------------------------------
80,766 72,001
Interest earning deposits in other banks ................ 137 136
Held-to-maturity securities (market value of $190,595 at
March 31, 1999 and $223,255 at December 31, 1998) .... 189,459 221,046
Available-for-sale securities ........................... 163,709 167,267
Loans receivable, net ................................... 977,506 1,018,365
Premises and equipment, net ............................. 55,231 55,657
Bank premises held for sale ............................. 2,100 2,100
Customers' acceptance liability ......................... 4,190 4,469
Accrued interest receivable ............................. 12,820 13,833
Other real estate owned ................................. 259 34
Deferred taxes .......................................... 5,762 4,753
Goodwill and other intangibles .......................... 11,502 11,751
Other assets ............................................ 5,012 4,000
- --------------------------------------------------------------------------------------------
Total assets ............................................ $ 1,508,453 $ 1,575,412
============================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing .................................... $ 252,459 $ 260,253
Interest bearing:
NOW and money market .................................... 195,268 186,066
Savings ................................................. 129,156 129,430
Time .................................................... 720,664 709,621
- --------------------------------------------------------------------------------------------
1,297,547 1,285,370
Securities sold under repurchase agreements ............. 22,469 55,099
Other short-term borrowings ............................. 3,047 3,200
FHLB borrowings ......................................... -- 50,000
Acceptances outstanding ................................. 4,190 4,469
Accrued interest payable ................................ 2,587 2,944
Income taxes payable .................................... 3,592 618
Other liabilities ....................................... 1,725 2,058
- --------------------------------------------------------------------------------------------
Total liabilities ....................................... 1,335,157 1,403,758
- --------------------------------------------------------------------------------------------
Minority interest in consolidated subsidiary ............ 657 651
- --------------------------------------------------------------------------------------------
Stockholders' equity:
Common stock -- authorized 50,000,000 shares of $0.01 par
value: 21,230,892 shares issued and outstanding at
March 31, 1999 and December 31, 1998 ................. 212 212
Capital surplus ......................................... 114,519 114,519
Retained earnings ....................................... 58,253 56,011
Accumulated other comprehensive (loss) income ........... (345) 261
- --------------------------------------------------------------------------------------------
Total stockholders' equity .............................. 172,639 171,003
- --------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity .............. $ 1,508,453 $ 1,575,412
============================================================================================
</TABLE>
See condensed notes to consolidated financial statements.
<PAGE>
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------------------
1999 1998
- --------------------------------------------------------------------------------------------
(UNAUDITED)
-----------------------------------
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<S> <C> <C>
Interest income:
Interest and fees on loans ............................. $22,075 $20,984
Investment securities:
Taxable interest ....................................... 5,487 5,486
Tax exempt interest .................................... 278 369
Interest on deposits in other banks .................... 2 90
Interest on federal funds sold ......................... 375 805
- ----------------------------------------------------------------------------------------
Total interest income .................................. 28,217 27,734
- ----------------------------------------------------------------------------------------
Interest expense:
Deposits ............................................... 10,925 11,970
Securities sold under repurchase agreements ............ 488 510
Other borrowings ....................................... 385 101
- ----------------------------------------------------------------------------------------
Total interest expense ................................. 11,798 12,581
- ----------------------------------------------------------------------------------------
Net interest income .................................... 16,419 15,153
Provision for loan losses .............................. 1,560 1,500
- ----------------------------------------------------------------------------------------
Net interest income after provision for loan losses .... 14,859 13,653
- ----------------------------------------------------------------------------------------
Non-interest income:
Service charges on deposit accounts .................... 2,750 2,984
Other charges, commissions and fees .................... 3,097 2,668
Gain on sale of securities ............................. 0 52
- ----------------------------------------------------------------------------------------
5,847 5,704
- ----------------------------------------------------------------------------------------
Non-Interest expenses:
Salaries and wages ..................................... 5,409 5,193
Employee benefits ...................................... 1,532 1,396
Occupancy expense ...................................... 1,495 1,666
Furniture and equipment expense ........................ 835 753
Other real estate owned expense ........................ 20 47
Other .................................................. 4,508 4,060
- ----------------------------------------------------------------------------------------
13,799 13,115
- ----------------------------------------------------------------------------------------
Income before provision for income taxes ............... 6,907 6,242
Provision for income taxes ............................. 2,523 1,932
- ----------------------------------------------------------------------------------------
Income before minority interest ........................ 4,384 4,310
Minority interest ...................................... 19 41
- ----------------------------------------------------------------------------------------
Net income ............................................. $ 4,365 $ 4,269
- ----------------------------------------------------------------------------------------
Basic and diluted earnings per share ................... $ 0.21 $ 0.21
========================================================================================
</TABLE>
See condensed notes to consolidated financial statements.
<PAGE>
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK
--------------------- ACCUMULATED
SHARES OTHER TOTAL
ISSUED AND PAR CAPITAL RETAINED COMPREHENSIVE STOCKHOLDERS'
OUTSTANDING VALUE SURPLUS EARNINGS INCOME (LOSS) EQUITY
- ----------------------------------------------------------------------------------------------------------------------------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1998 ............. 20,093 $ 10,047 $ 89,394 $ 46,311 $ 379 $ 146,131
Change in par value .................... -- (9,846) 9,846 -- -- --
Cash dividend .......................... -- -- -- (1,407) -- (1,407)
Net income ............................. -- -- -- 4,269 -- 4,269
Initial public offering, net of
offering expenses ................. 1,233 12 16,292 -- -- 16,304
Other comprehensive loss ............... -- -- -- -- (152) (152)
- ----------------------------------------------------------------------------------------------------------------------------------
Balance at March 31, 1998 .............. 21,326 $ 213 $ 115,532 $ 49,173 $ 227 $ 165,145
==================================================================================================================================
Balance at January 1, 1999 ............. 21,231 $ 212 $ 114,519 $ 56,011 $ 261 $ 171,003
Cash dividend .......................... -- -- -- (2,123) -- (2,123)
Net income ............................. -- -- -- 4,365 -- 4,365
Other comprehensive loss ............... -- -- -- -- (606) (606)
- ----------------------------------------------------------------------------------------------------------------------------------
Balance at March 31, 1999 .............. 21,231 $ 212 $ 114,519 $ 58,253 $ (345) $ 172,639
==================================================================================================================================
</TABLE>
See condensed notes to consolidated financial statements.
<PAGE>
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------
1999 1998
- -----------------------------------------------------------------------------------------------------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Cash flows from operating activities:
Net income ................................................................. $ 4,365 $ 4,269
- -----------------------------------------------------------------------------------------------------------
Adjustments to reconcile net income to net cash provided by operating
activities:
Minority interest in consolidated subsidiary ............................... 19 41
Depreciation and amortization .............................................. 778 818
Net investment amortization (accretion) .................................... 170 (107)
Amortization of goodwill and other intangibles ............................. 281 284
Provision for loan losses .................................................. 1,560 1,500
Deferred tax benefit ....................................................... (625) --
Gain on sale of securities ................................................. -- (52)
Other ...................................................................... 12 (2)
Changes in assets and liabilities:
Decrease in unearned income ................................................ (389) (69)
Decrease in accrued interest receivable .................................... 1,013 1,515
Increase in other assets ................................................... (1,012) (611)
Increase in income taxes payable ........................................... 2,974 1,789
Decrease in accrued interest payable ....................................... (357) (13)
Decrease in other liabilities .............................................. (333) (616)
- -----------------------------------------------------------------------------------------------------------
Total adjustments .......................................................... 4,091 4,477
- -----------------------------------------------------------------------------------------------------------
Net cash provided by operating activities .................................. 8,456 8,746
- -----------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from redemptions of held-to-maturity securities ................... 34,524 44,097
Purchases of held-to-maturity securities ................................... (2,986) (110,778)
Proceeds form sales or redemptions of available-for-sale securities ........ 17,459 92,600
Purchases of available-for-sale securities ................................. (15,014) (39,490)
Net loan payments (originations) ........................................... 39,450 (9,513)
Investment in premises and equipment ....................................... (360) (644)
Other ...................................................................... (25) (27)
- -----------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities ........................ 73,048 (23,755)
- -----------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net Increase in demand deposits, NOW, money market and savings accounts..... 1,134 16,446
Net increase (decrease) in time deposits ................................... 11,043 (15,473)
Net (decrease) increase in securities sold under repurchase agreements ..... (32,630) 8,149
Net decrease in other borrowings ........................................... (50,153) (1,377)
Net proceeds from Issuance of common stock ................................. -- 16,304
Dividend paid by subsidiary to minority interest ........................... (10) (15)
Cash dividends paid ........................................................ (2,123) (1,407)
- -----------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities ........................ (72,739) 22,627
- -----------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents ................................. 8,765 7,618
Cash and cash equivalents, beginning of the year ........................... 72,001 125,400
- -----------------------------------------------------------------------------------------------------------
Cash and cash equivalents, at March 31 ..................................... $ 80,766 $ 133,018
===========================================================================================================
</TABLE>
(continued)
<PAGE>
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS---(CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------
1999 1998
- -----------------------------------------------------------------------------------------------------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest ................................................................... $ 12,155 $ 12,594
===========================================================================================================
Income taxes ............................................................... $ 175 $ 91
===========================================================================================================
Supplemental disclosure of noncash investing and financing activities:
Transfers from loans to other real estate owned ............................ $ 238 --
===========================================================================================================
</TABLE>
See condensed notes to consolidated financial statements.
<PAGE>
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------
1999 1998
- ----------------------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C>
Net Income ....................................................... $ 4,365 $ 4,269
- ----------------------------------------------------------------------------------------------
Other comprehensive income (loss), net of tax:
Net unrealized losses on securities available for sale
arising during the period .............................. (606) (103)
Reclassification adjustment for net gains included in net income -- (49)
- ----------------------------------------------------------------------------------------------
Other comprehensive loss ......................................... (606) (152)
- ----------------------------------------------------------------------------------------------
Comprehensive income ............................................. $ 3,759 $ 4,117
==============================================================================================
</TABLE>
See condensed notes to consolidated financial statements.
<PAGE>
- --------------------------------------------------------------------------------
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. GENERAL
The accounting and reporting policies of Republic Banking Corporation of Florida
and its subsidiary conform to generally accepted accounting principles and to
predominant practices within the banking industry. The company has not changed
its accounting and reporting policies from those disclosed in its 1998 Annual
Report on Form 10-K.
The results of operations for the three-month period ended March 31, 1999 may
not be indicative of operating results for the year ending December 31, 1999.
The financial statements for the three month period ended March 31, 1999 and
March 31, 1998 have not been audited.
In the opinion of the company's management, all adjustments necessary to fairly
present the financial position as of March 31, 1999 and December 31, 1998, and
the results of operations and cash flows for the periods ended March 31, 1999
and 1998, all of which are of a normal and recurring nature, have been included.
B. ALLOWANCE FOR LOAN LOSSES
Changes in the allowance for loan losses are as follows (in thousands):
FOR THE THREE MONTHS
ENDED
MARCH 31,
-----------------------
1999 1998
- --------------------------------------------------------------------
Balance at beginning of period ........ $ 12,402 $ 11,999
Provision charged to operations ....... 1,560 1,500
- --------------------------------------------------------------------
13,962 13,499
- --------------------------------------------------------------------
Loans charged-off ..................... (409) (680)
Less recoveries ....................... 441 347
- --------------------------------------------------------------------
Net recoveries (charge-offs) ..... 32 (333)
- --------------------------------------------------------------------
Balance at end of period .............. $ 13,994 $ 13,166
====================================================================
Loans not accruing interest at end
of period ........................ $ 10,177 $ 10,959
====================================================================
<PAGE>
- --------------------------------------------------------------------------------
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
C. EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
----------------------------
1999 1998
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Basic Shares:
Weighted average common shares outstanding ............................. 21,230,892 20,682,358
Earnings per common share .............................................. $ 0.21 $ 0.21
Diluted Shares:
Weighted average common shares outstanding ............................. 21,230,892 20,682,358
Weighted average common shares assumed
outstanding to reflect dilutive effect of common stock options .... 27,119 36,071
Total diluted average common shares outstanding ........................ 21,258,011 20,718,429
Diluted earnings per common share ...................................... $ 0.21 $ 0.21
</TABLE>
D. TAX EFFECT OF OTHER COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1999
---------------------------------
BEFORE-TAX TAX NET-OF-TAX
AMOUNT EFFECT AMOUNT
- -------------------------------------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C>
Unrealized gains (losses) on securities:
Net unrealized losses on securities available
for sale arising during the period ................................. $(987) $ 381 $(606)
Reclassification adjustment for net gains
included in net income ............................................. -- -- --
- -----------------------------------------------------------------------------------------------------------
Other comprehensive loss ............................................... $(987) $ 381 $(606)
===========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1998
---------------------------------
BEFORE-TAX TAX NET-OF-TAX
AMOUNT EFFECT AMOUNT
- -----------------------------------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C>
Unrealized gains (losses) on securities:
Net unrealized losses on securities available
for sale arising during the period ................................. $(167) $ 64 $(103)
Reclassification adjustment for net gains
included in net income ............................................. (80) 31 (49)
- -----------------------------------------------------------------------------------------------------------
Other comprehensive loss ............................................... $(247) $ 95 $(152)
===========================================================================================================
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
E. SEGMENT REPORT
The following table represents the total dollar amount of external revenue,
internal revenue and net income before taxes by operating segment for the
quarter ended March 31, 1999 (in thousands).
<TABLE>
<CAPTION>
RESIDENTIAL
COMMERCIAL MORTGAGE INTERNATIONAL PRIVATE COMMERCIAL
REAL ESTATE LENDING OPERATIONS BANKING LENDING
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
External revenue ........... $ 8,721 $ 3,633 $ 3,166 $ 571 $ 4,753
Internal revenue ........... $ 0 $ 4 $ 14 $ 1,956 $ 0
Net income before taxes ..... $ 3,901 $ 1,141 $ 804 $ 118 $ 1,193
<CAPTION>
INTER SEGMENT
RETAIL INVESTMENTS OTHER ELIMINATIONS TOTAL
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
External revenue ................... $ 7,010 $ 6,260 $ 89 $ (139) $ 34,064
Internal revenue ................... $ 10,080 $ 0 $ 6,384 $(18,438) $ 0
Net income (loss) before taxes ..... $ (562) $ 1,205 $ (754) $ (139) $ 6,907
</TABLE>
Net income before taxes is computed based on internal allocations for income and
expense recognition. These allocations include an assigned cost of capital,
overhead and income or expense associated with the internal sale of funds
between domestic and foreign activities.
F. FOREIGN ACTIVITIES
Republic lends to foreign domiciled borrowers and obtains deposits from foreign
domiciled customers. To a lesser extent, Republic makes investments in foreign
securities.
The following table represents the total dollar amount of revenue, net income
before taxes and net income associated with foreign activities for the quarter
ended March 31, 1999 (in thousands).
Interest Income $3,623
Non Interest Income 278
------------------------------------------------
Total Revenue $3,901
================================================
------------------------------------------------
Net Income Before Taxes $1,632
================================================
------------------------------------------------
Net Income $1,003
================================================
<PAGE>
ITEM 2.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
This Form 10-Q contains "forward looking statements" which represent Republic's
expectations or beliefs including, but not limited to, statements concerning
Republic's operations, performance, financial condition, growth or strategies.
For this purpose, any statements contained in the Form 10-Q that are not
statements of historical facts may be deemed to be forward looking statements.
Without limiting the generality of the foregoing, words such as "may", "will",
"expect", "believe", "estimate", "anticipate" or "continue" or the negative or
other variations thereof or comparable terminology are intended to identify
forward-looking statements. The statements by their nature involve substantial
risks and uncertainties, certain of which are beyond Republic's control, and
actual results may differ materially depending on a variety of important
factors, including but not limited to the potential impact of changes in
interest rates, competition, credit risks and collateral, changes in local or
regional economic conditions, the ability of Republic to continue its growth
strategy, dependence on management and key personnel, regulatory supervision and
cross-border lending activities.
RESULTS OF OPERATIONS
Republic Banking Corporation of Florida ("Republic") reported first quarter 1999
net income of $4.4 million or $0.21 per average basic and diluted share,
compared to $4.3 million or $0.21 per average basic and diluted share in the
first quarter of 1998.
First quarter 1999 and 1998 results represent a return on average assets of
1.14%. Return on average shareholders' equity was 10.36% for the first quarter
of 1999 compared to 11.19% for the first quarter of 1998.
Net income for the first quarter of 1999 increased from the first quarter of
1998 by 2.3%. Net income per average basic and diluted share remained constant
with the first quarter of 1998 due to an increase in the number of common shares
outstanding in 1998.
On February 22, 1999, Union Planters Bank, N.A. ("Union Planters") and Republic
entered into an agreement to merge. Under the term of this agreement, Republic
will be merged into Union Planters and Republic shareholders will receive cash
for their shares of common stock in Republic. The transaction is subject to
regulatory and shareholder approval and is expected to be consummated in
mid-July. In the interim, Republic is conducting its business in accordance with
the terms of the agreement and management's attention and emphasis is aimed at
the consummation of the transaction and subsequent integration into the Union
Planters' system. Steps taken towards this end may adversely affect temporarily
Republic's earnings.
<PAGE>
- --------------------------------------------------------------------------------
SELECTED QUARTERLY DATA
<TABLE>
<CAPTION>
AS OF AND FOR THE
THREE MONTHS ENDED
MARCH 31,
---------------------------------------------
1999 1998
- --------------------------------------------------------------------------------------------------------
(UNAUDITED)
---------------------------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C>
INCOME STATEMENT DATA:
Interest income ........................................ $ 28,217 $ 27,734
Interest expense ....................................... 11,798 12,581
------------------------------
Net interest income .................................... 16,419 15,153
Provision for loan losses .............................. 1,560 1,500
------------------------------
Net interest income after provision for loan losses .... 14,859 13,653
Non-interest income .................................... 5,847 5,704
Non-interest expenses .................................. 13,799 13,115
------------------------------
Net income before taxes ................................ 6,907 6,242
Provision for income taxes ............................. 2,523 1,932
Minority interest ...................................... 19 41
------------------------------
Net income ............................................. $ 4,365 $ 4,269
==============================
PER SHARE DATA:
Basic and diluted earnings ............................. $ 0.21 $ 0.21
Book value ............................................. 8.13 7.74
Tangible book value .................................... 7.59 7.16
Cash dividends ......................................... 0.10 0.07
Dividends payout ratio ................................. 47.62 % 33.33 %
Weighted average common and common equivalent
shares outstanding (in thousands) ................. 21,231 20,682
BALANCE SHEET DATA:
Total assets ........................................... $ 1,508,453 $ 1,543,577
Securities ............................................. 353,168 386,471
Total loans ............................................ 991,500 938,657
Allowance for loan losses .............................. 13,994 13,166
Total deposits ......................................... 1,297,547 1,303,190
Total shareholders' equity ............................. 172,639 165,145
AVERAGE BALANCE SHEET DATA:
Total assets ........................................... $ 1,555,975 $ 1,516,697
Securities ............................................. 380,469 379,668
Total loans ............................................ 1,010,806 930,644
Allowance for loan losses .............................. 12,877 12,348
Total deposits ......................................... 1,291,310 1,298,918
Total shareholders' equity ............................. 170,884 154,699
PERFORMANCE RATIOS:
Return on average assets ............................... 1.14 % 1.14 %
Return on average equity ............................... 10.36 11.19
Net interest margin .................................... 4.68 4.47
Efficiency ratio ....................................... 61.97 62.88
ASSET QUALITY RATIOS:
Non-performing assets to total loans
and other real estate ............................. 1.07 % 1.43 %
Net loan charge-offs to average loans .................. (0.00) 0.04
Allowance for loan losses to total loans ............... 1.41 1.40
Allowance for loan losses to non-performing loans ...... 135.68 115.17
CAPITAL RATIOS:
Leverage ratio (Tier 1 capital-to-total assets) ........ 10.78 % 10.23 %
Tier 1 risk-based capital ratio ........................ 17.34 16.93
Total risk-based capital ratio ......................... 18.59 18.18
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS--(CONTINUED)
NET INTEREST INCOME
Net interest income for the first quarter of 1999 increased by 8.4% from the
first quarter of 1998 due to an increase in the volume of average interest
earning assets, which increased by 3.6%, and also due to an increase in the net
interest margin.
Growth in average interest earning assets was centered in loans. The average
loan volume increased by $80 million or 8.6%, while the average volume of lower
yielding federal funds sold declined by $31 million. Average interest bearing
liabilities increased by $33 million or 3.1%. Average equity funding increased
by $16 million.
Net interest margin increased from 4.47% in the first quarter of 1998 to 4.68%
in the first quarter of 1999. Net interest spread increased from 3.49% in the
first quarter of 1998 to 3.77% in the first quarter of 1999. The wider margin
reflects increased equity funding and improvement in the company's cost of
interest bearing liabilities which declined by 43 basis point while the yield on
earning assets declined by only 15 basis point.
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS--(CONTINUED)
The following table represents, for the periods indicated, the total dollar
amount of interest income from average interest earning assets and the resultant
yields, as well as the interest expense on average interest bearing liabilities
and the resultant rates. No tax equivalent adjustments have been made. All
average balances are daily average balances. Non-accruing loans have been
included in the table as loans carrying a zero yield.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
---------------------------------------------------------------------------------------
1999 1998
------------------------------------------ ------------------------------------------
AVERAGE AVERAGE
OUTSTANDING INTEREST AVERAGE OUTSTANDING INTEREST AVERAGE
BALANCE EARNED/PAID YIELD/RATE BALANCE EARNED/PAID YIELD/RATE
- ------------------------------------------------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Interest earning assets:
Total loans ............................... $1,010,806 $ 22,075 (1) 8.86 % $ 930,644 $ 20,984 (1) 9.14 %
Taxable securities ........................ 359,425 5,487 6.19 350,813 5,486 6.34
Tax-exempt securities ..................... 21,044 278 5.36 28,855 369 5.19
Federal funds sold and other
temporary investments ................ 32,065 377 4.77 63,218 895 5.74
---------- -------- ------ ----------- ---------- -------
Total interest earning assets ............. 1,423,340 28,217 8.04 1,373,530 27,734 8.19
-------- ------ ---------- -------
Less allowance for loan losses ............ 12,877 12,348
---------- -----------
Total interest earning assets, net of
allowance ............................. 1,410,463 1,361,182
Non-earning assets ......................... 145,512 155,515
---------- -----------
Total assets ............................... $1,555,975 $ 1,516,697
========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities:
Interest bearing demand deposits ........... $ 52,565 135 1.04 $ 59,920 224 1.52
Savings and money market accounts .......... 265,525 1,877 2.87 252,847 1,949 3.13
State, county and municipal
certificates of deposit ............... 98,748 1,281 5.26 46,883 660 5.71
Certificates of deposit .................... 622,225 7,632 4.97 675,672 9,137 5.48
Federal funds purchased and securities
sold under repurchase agreements ....... 44,695 488 4.43 46,656 556 4.83
Other borrowings ........................... 35,724 385 4.37 4,263 55 5.23
---------- -------- ------ ------------ ---------- -------
Total interest bearing liabilities ......... 1,119,482 11,798 4.27 1,086,241 12,581 4.70
-------- ------ ---------- -------
Non-interest bearing demand deposits ....... 252,247 263,596
Other liabilities .......................... 12,709 10,801
---------- -----------
Total liabilities .......................... 1,384,438 1,360,638
Minority interest .......................... 653 1,360
Shareholders' equity ....................... 170,884 154,699
---------- -----------
Total liabilities and shareholders' equity . $1,555,975 $ 1,516,697
========== ===========
Net interest income ........................ $ 16,419 $ 15,153
======== ==========
Net interest spread ........................ 3.77% 3.49%
====== =======
Net interest margin ........................ 4.68% 4.47%
====== =======
</TABLE>
(1) Includes $1,091,000 and $ 577,000 in loan fees for 1999 and 1998,
respectively.
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS--(CONTINUED)
The following table presents the dollar amount of changes in interest income and
interest expense for the major components of interest earning assets and
interest bearing liabilities. For purposes of this table, changes attributable
to both rate and volume have been allocated to rate.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1999 V. 1998
------------------------------------
INCREASE (DECREASE)
DUE TO
----------------------
VOLUME RATE TOTAL
- --------------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Interest earning assets:
Total loans ............................................ $ 1,807 $ (716) $ 1,091
Securities ............................................. 12 (102) (90)
Federal funds sold and other temporary investments ..... (441) (77) (518)
- -------------------------------------------------------------------------------------------------
Total increase (decrease) in interest income ........... 1,378 (895) 483
- -------------------------------------------------------------------------------------------------
Interest bearing liabilities:
Interest bearing demand deposits ....................... (28) (61) (89)
Savings and money market accounts ...................... 98 (170) (72)
State, county and municipal certificates of deposit..... 730 (109) 621
Certificates of deposit and other time deposits ........ (722) (783) (1,505)
Federal funds purchased and securities sold under
repurchase agreements ............................. (23) (45) (68)
Other borrowings ....................................... 406 (76) 330
- -------------------------------------------------------------------------------------------------
Total increase (decrease) in interest expense .......... 461 (1,244) (783)
- -------------------------------------------------------------------------------------------------
Increase (decrease) in net interest income ............. $ 917 $ 349 $ 1,266
=================================================================================================
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS--(CONTINUED)
PROVISION FOR LOAN LOSSES
In determining the adequacy of the allowance for loan losses, Republic considers
portfolio quality, composition, loss experience, growth, economic conditions and
other risk factors related to the loan portfolio. The provision for loan losses
for the first quarter of 1999 increased to $1.560 million from $1.500 million in
the first quarter of 1998, a 4.0% increase. At March 31, 1999 the allowance for
loan losses, at $14 million, represented 1.4% of total loans and 135.7% of
non-performing loans.
First quarter 1999 recoveries exceeded charge-offs. Net recoveries for the 1999
first quarter were $32,000 as compared to net charge-offs of $333,000, or 0.04%
of average loans, in the first quarter of 1998.
The provision for the first quarter of 1999 of $1.560 million increased the
allowance for loan losses from 1.2% of total loans at December 31, 1998 to 1.4%
of total loans at March 31, 1999. The provision amount results from management's
assessment of potential losses in the loan portfolio. The provision amount
includes $169,000 in allocated transfer risk reserves for cross-border risk
exposure.
NON-INTEREST INCOME
Non-interest income for the first quarter of 1999 increased by 2.5% from the
first quarter of 1998, excluding securities transactions. The increase in
non-interest income results primarily from growth in revenues from merchant
credit card discounts which increased 21.8% from the first quarter of 1998. The
increase in merchant credit card discount revenues, however, was offset by a
larger dollar increase in associated interchange expenses reflected in
non-interest expense. Deposit service charge income declined by 7.8% from the
first quarter of 1998 reflecting lower overdraft transaction fee income.
The following table represents, for the periods indicated, the major categories
of non-interest income.
THREE MONTHS ENDED
MARCH 31,
--------------------------
1999 1998
- -----------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
Service charges on deposit accounts ...... $2,750 $2,984
Merchant credit card discounts ........... 2,181 1,790
Gains on sale of securities .............. -- 52
Other non-interest income ................ 916 878
- -----------------------------------------------------------------------
Total non-interest income ...... $5,847 $5,704
=======================================================================
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS--(CONTINUED)
NON-INTEREST EXPENSE
Non-interest expense for the first quarter of 1999 increased by 5.2% from the
first quarter of 1998. Personnel costs increased by 5.3% in the same period.
Merchant credit card exchange fees increased by 39.2%. See NON-INTEREST INCOME.
Occupancy, furniture and equipment, and other expenses were level with the first
quarter of 1998.
The following table represents, for the periods indicated, the major categories
of non-interest expenses.
THREE MONTHS ENDED
MARCH 31,
--------------------------
1999 1998
- ----------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
Employee compensation and benefits $ 6,941 $ 6,589
- ----------------------------------------------------------------------
Non-staff expenses:
Occupancy 1,495 1,666
Furniture and equipment 835 753
Merchant credit card interchange fees 1,684 1,210
Amortization of intangibles 281 283
Other 2,563 2,614
- ----------------------------------------------------------------------
Total non-staff expenses 6,858 6,526
- ----------------------------------------------------------------------
Total non-interest expense $13,799 $13,115
======================================================================
<PAGE>
- --------------------------------------------------------------------------------
ANALYSIS OF FINANCIAL CONDITION
LOAN PORTFOLIO
End of period gross loans at March 31, 1999 declined by $39.5 million, or 3.8%,
from December 31, 1998. The decline was centered in foreign loans which
decreased by $34.0 million, or 17.0%, as management reduced its foreign exposure
in light of economic conditions in some South American countries.
Construction loans increased by 14.9% during the quarter and offset most of the
decline in other domestic loan categories. Commercial real estate loans declined
by 5.3% during the quarter. Consumer lending volume continues to decline as a
result of the discontinuation of the indirect auto lending activities in 1997.
The following table reflects the major classification of loans for the periods
indicated.
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
------------------------------------
1999 1998
- -----------------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C>
Domestic:
Commercial ........................................ $ 223,611 $ 228,472
Commercial real estate ............................ 242,071 255,604
Construction ...................................... 162,261 141,241
Domestic banks .................................... 100 -
Residential first mortgages ....................... 150,528 154,466
Residential equity lines .......................... 12,937 13,324
Consumer .......................................... 32,758 36,028
Overdrafts ........................................ 3,353 3,965
- ---------------------------------------------------------------------------------------
Total domestic .................................... 827,619 833,100
- ---------------------------------------------------------------------------------------
Foreign:
Banks ............................................. 101,132 115,392
Government ........................................ 15,200 30,200
Other ............................................. 49,668 54,408
- ---------------------------------------------------------------------------------------
Total foreign ..................................... 166,000 200,000
- ---------------------------------------------------------------------------------------
Total gross loans ................................. 993,619 1,033,100
Unearned income ................................... (2,119) (2,333)
- ---------------------------------------------------------------------------------------
991,500 1,030,767
Allowance for loan losses and transfer risk ....... (13,994) (12,402)
- ---------------------------------------------------------------------------------------
Loans, net ........................................ $ 977,506 $ 1,018,365
- ---------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
ANALYSIS OF FINANCIAL CONDITION--(CONTINUED)
TOTAL CROSS-BORDER OUTSTANDINGS BY COUNTRY
The following table sets forth, at the dates indicated, the aggregate amount of
Republic's cross-border outstandings (including foreign bonds, due from bank
accounts, acceptances and interest earning deposits with other banks), as well
as the percentage of such cross-border outstandings to Republic's total assets.
Cross-border exposures in which the total to one country did not reach $14
million, on the dates indicated are aggregated under "Other".
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
-------------------------- -----------------------------
1999 1998
-------------------------- -----------------------------
% OF TOTAL % OF TOTAL
AMOUNT ASSETS AMOUNT ASSETS
- --------------------------------------------------------------------------------------------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Ecuador $35 2.32% $42 2.67%
Peru 19 1.26 29 1.84
El Salvador 17 1.13 12 0.76
Brazil 15 0.99 34 2.16
Guatemala 15 0.99 12 0.76
Panama 14 0.93 14 0.89
Other 55 3.65 58 3.68
---------------------------------------------------------
Total $170 11.27% $ 201 12.76%
=========================================================
</TABLE>
Cross-border outstandings reflect the country of domicile of the obligor. Some
of these obligations are guaranteed or secured by collateral outside the country
of domicile of the obligor. As of March 31, 1999, approximately $26 million in
loans to foreign domiciled borrowers were secured by first mortgages on
residential property in the United States and approximately $10 million were
secured by cash collateral on deposit at Republic.
NON-PERFORMING ASSETS
The following table presents information regarding non-performing assets at the
dates indicated.
MARCH 31, DECEMBER 31,
-------- ------------
1999 1998
-------- --------
(DOLLARS IN THOUSANDS)
Non-accrual loans ........................ $10,177 $ 7,619
Restructured loans ....................... -- 48
Accruing loans 90 days
or more past due ...................... 137 2,318
Other real estate ........................ 259 34
------- -------
Total non-performing assets ........... $10,573 $10,019
======= =======
Non-performing assets to total loans
and other real estate ................. 1.07% 0.97%
At March 31, 1999, non-performing assets increased by $0.6 million from December
31, 1998, reflecting an increase in the overall volume of non-accrual loans. The
ratio of non-performing assets to total loans and other real estate increased
from 0.97% at December 31, 1998 to 1.07% at March 31, 1999. There were no
foreign non-performing assets at March 31, 1999.
<PAGE>
- --------------------------------------------------------------------------------
ANALYSIS OF FINANCIAL CONDITION--(CONTINUED)
ALLOWANCE FOR LOAN LOSSES
The following table presents, for the periods indicated, an analysis of the
allowance for loan losses and other related data.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------------------
1999 1998
- -------------------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Average loans outstanding .......................................... $1,010,806 $930,644
=======================================================================================================
Total loans outstanding at end of period ........................... 991,500 938,657
=======================================================================================================
Allowance for loan losses at beginning of period ................... $ 12,402 $11,999
Provision for loan losses .......................................... 1,560 1,500
Charge-offs:
Commercial and industrial ..................................... (216) (298)
Real estate ................................................... (40) (29)
Consumer ...................................................... (153) (353)
Foreign ....................................................... -- --
Recoveries:
Commercial and industrial ..................................... 172 174
Real estate ................................................... 135 6
Consumer ...................................................... 134 167
Foreign ....................................................... -- --
- -------------------------------------------------------------------------------------------------------
Net loan recoveries (charge-offs) .................................. 32 (333)
- -------------------------------------------------------------------------------------------------------
Allowance for loan losses at end of period ......................... $ 13,994 $13,166
=======================================================================================================
Ratio of allowance to end of period loans .......................... 1.41% 1.40%
Ratio of net loan charge-offs to average loans (quarter) ........... (0.00) 0.04
Ratio of allowance to end of period non-performing loans ........... 135.68 115.17
- -------------------------------------------------------------------------------------------------------
</TABLE>
At March 31, 1999 the allowance for loan losses, at $14.0 million, represented
1.4% of total loans and 135.7% of non-performing loans. Net recoveries for the
three month period ended March 31, 1999 were $32,000 as compared to net loan
charge-offs of $333,000 for the comparable period in 1998. The overall allowance
for loan losses includes $177,000 in allocated transfer risk reserves for
cross-border risk exposure.
<PAGE>
- --------------------------------------------------------------------------------
ANALYSIS OF FINANCIAL CONDITION--(CONTINUED)
INVESTMENT SECURITIES AND OTHER EARNING ASSETS
Average investment securities and other temporary investments represent $412.5
million, or 26.5%, of average assets for the first quarter of 1999 and decreased
by $30.4 million from the average for the first quarter of 1998. The decrease
was centered in federal funds sold which declined by $31.2 million.
The investment securities portfolio decreased by $35.1 million from December 31,
1998 to March 31, 1999 as cash flow from maturing securities was used to reduce
wholesale borrowings. As of March 31, 1999, U.S. government agency securities
comprised 80.6% of investment securities and U.S. Treasury obligations comprised
10.6% of investment securities. The balance of investment securities is composed
of investment grade securities, primarily bank qualified municipal obligations.
DERIVATIVES
At March 31, 1999, there were no off-balance sheet derivative contracts
outstanding. Republic does engage in a nominal amount of foreign exchange
contracts, primarily as an accommodation to commercial customer needs. The
investment portfolio contains securities with callable options.
DEPOSITS AND OTHER FUNDING SOURCES
End of period deposits at March 31, 1999 increased by $12.2 million, or 1.0%
from December 31, 1998. NOW and money market deposits increased by 5.0%
reflecting growth in premium rate money market deposits during this period.
Non-interest bearing deposits declined by 3.0% during the same period. End of
period borrowings at March 31, 1999 decreased by $82.8 million or 76.4% from
December 31, 1998 as Republic reduced its wholesale borrowing activities.
CAPITAL RESOURCES
Republic is subject to capital adequacy requirements imposed by the Federal
Reserve Board and its subsidiary bank is subject to similar requirements imposed
by the Office of the Comptroller of the Currency.
The following table provides a comparison of Republic's leverage and risk-based
capital ratios as of March 31, 1999 to the minimum and well capitalized
regulatory standards.
<TABLE>
<CAPTION>
ACTUAL RATIO
MINIMUM REQUIRED WELL-CAPITALIZED AT MARCH 31, 1999
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Leverage ratio 3.00% (1) 5.00% 10.78%
Tier 1 risk-based capital ratio 4.00 6.00 17.34
Risk-based capital ratio 8.00 10.00 18.59
</TABLE>
(1) The FRB may require Republic to maintain a leverage ratio of up to 200
basis points above the required minimum.
<PAGE>
- --------------------------------------------------------------------------------
ANALYSIS OF FINANCIAL CONDITION--(CONTINUED)
MARKET RISK, INTEREST RATE SENSITIVITY AND LIQUIDITY
Net interest income, Republic's primary source of revenue, is affected by
changes in interest rates as well as the mix of interest earning assets and
interest bearing liabilities comprising the balance sheet.
Interest rate risk and balance sheet mix is managed within policy guidelines.
The Asset/Liability Management Committee reviews Republic's interest rate risk
and balance sheet mix position on a regular basis.
Temporary investments and debt securities are the primary sources of liquidity.
Additional liquidity is provided by loan repayments and available funding
sources.
Republic uses GAP analysis as an analytical tool but recognizes that
shortcomings are inherent in GAP analysis since certain assets and liabilities
may not move proportionately as interest rates change. Consequently, in addition
to GAP analysis, Republic uses a simulation model to shock and test the interest
rate sensitivity of net interest income and the balance sheet.
The use of modeling techniques also has limitations and may not fully reflect
market risk exposures. Republic's time deposit funding sources have contractual
penalties for early withdrawal, nonetheless, changes in interest rates and other
individual depositor considerations may affect the actual timing of fund
withdrawal and the model cash flow assumptions. Similarly, term loans are
subject to refinancing in a declining rate environment, in many instances with
small cost to the borrowers that could affect cash flow assumptions. Republic's
modeling approach takes into consideration an assumed prepayment speed for term
residential mortgage loans. The prepayment speed is defined based on prevailing
market conditions at the time of each quarterly assessment.
The majority of Republic investment debt securities are callable at the option
of the issuer prior to the final maturity. The effect of this call feature on
future cash flows will vary depending on the coupon of the underlying security,
current market interest rates, and expected direction of interest rate movement.
The effect of a 200 basis point rise in the rate sensitivity analysis may have a
different effect on net interest income than the effect of a 200 basis point
decrease, depending on the expected maturity of the callable instruments under
each scenario. Management utilizes a valuation of the investment portfolio by a
third party in assessing the impact of a 200 basis point change on the expected
maturity of callable securities and its corresponding effect on cash flows and
net interest income.
Time deposits and other core deposit sources on which rates are set by
management such as savings deposits will not necessarily re-price in a parallel
fashion to money market interest rates. Taking this into consideration,
management has established interest rate floors for certain categories of core
deposits, such as savings and interest bearing checking accounts, in its rate
sensitivity simulation.
Based on the March 31, 1999 simulation analysis, Republic estimates that a 200
basis point rise or decline in interest rates over the next twelve month period
would have an impact of less than 2% on its net interest income for the same
period.
For the table below, savings deposits are reflected as repriceable in the 0-30
days window. Republic believes that these deposits on which rates are set by
management will re-price more slowly than the GAP analysis indicates. Callable
investment securities are categorized as subject to re-pricing based on the call
date of the instruments, which management considers to be the most likely
re-pricing window under the current rate environment. A rapid rise in interest
rates could yield a different re-pricing result than that reflected in the
table.
<PAGE>
ANALYSIS OF FINANCIAL CONDITION--(CONTINUED)
The following table sets forth an interest rate sensitivity analysis. The table
presents projected cash flows and related weighted average rates by expected
repayment dates at March 31, 1999 and GAP analysis information.
<TABLE>
<CAPTION>
VOLUMES SUBJECT TO REPRICING WITHIN
---------------------------------------------------------------------------------------
OVER
1 YEAR 1-2 YEARS 2-3 YEARS 3-4 YEARS 4-5 YEARS 5 YEARS
- -------------------------------------------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
INTEREST EARNING ASSETS:
Federal funds sold and other
temporary investments ......... $ 36,138 $ - $ - $ - $ - $ -
Average interest yield ......... 5.01% - - - - -
Taxable securities ................. 268,216 51,982 3,187 100 - 9,137
Average interest yield ........ 6.11% 5.77% 5.64% 6.75% - 7.08%
Tax-exempt securities .............. 551 1,778 2,425 2,902 3,011 9,879
Average interest yield ........ 5.32% 5.14% 5.25% 5.37% 5.28% 5.30%
Total loans ........................ 557,681 53,015 85,843 62,159 38,211 194,591
Average interest yield ........ 8.33% 8.57% 8.61% 8.60% 8.32% 8.11%
- -------------------------------------------------------------------------------------------------------------------------------
Total interest earning assets ...... 862,586 106,775 91,455 65,161 41,222 213,607
- -------------------------------------------------------------------------------------------------------------------------------
INTEREST BEARING LIABILITIES:
Demand, money market and
savings deposits .............. 324,424 - - - - -
Average interest rate ......... 2.65% - - - - -
Certificates of deposit and other
time deposits ................. 697,622 20,391 440 1,288 914 9
Average interest rate ......... 5.01% 4.69% 5.45% 5.97% 5.41% 5.27%
- -------------------------------------------------------------------------------------------------------------------------------
Total interest bearing deposits .... 1,022,046 20,391 440 1,288 914 9
- -------------------------------------------------------------------------------------------------------------------------------
Federal funds purchased and
securities sold under
repurchase agreements ......... 22,469 - - - - -
Average interest rate ......... 4.06% - - - - -
Other borrowings ................... 3,047 - - - - -
Average interest rate ......... 4.76% - - - - -
- -------------------------------------------------------------------------------------------------------------------------------
Total interest bearing liabilities . 1,047,562 20,391 440 1,288 914 9
- -------------------------------------------------------------------------------------------------------------------------------
Period GAP ............................. (184,976) 86,384 91,015 63,873 40,308 213,598
Cumulative GAP ......................... (184,976) (98,592) (7,577) 56,296 96,604 310,202
Period GAP to total assets ............. (12.26)% 5.73% 6.03% 4.23% 2.67% 14.16%
Cumulative GAP to total assets ......... (12.26)% (6.54)% (0.50)% 3.73% 6.40% 20.56%
Cumulative interest earning assets
to cumulative interest bearing
liabilities ....................... 82.34% 90.77% 99.29% 105.26% 109.02% 128.97%
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------
ESTIMATED
TOTAL FAIR VALUE
-----------------------------
<S> <C> <C>
INTEREST EARNING ASSETS:
Federal funds sold and other
temporary investments ......... $36,138 $ 36,138
Average interest yield ......... 5.01%
Taxable securities ................. 332,622 332,763
Average interest yield ........ 6.08%
Tax-exempt securities .............. 20,546 21,541
Average interest yield ........ 5.29%
Total loans ........................ 991,500 994,529
Average interest yield ........ 8.34%
- ----------------------------------------------------------------------
Total interest earning assets ...... 1,380,806 1,389,715
- ----------------------------------------------------------------------
INTEREST BEARING LIABILITIES:
Demand, money market and
savings deposits .............. 324,424 324,424
Average interest rate ......... 2.65%
Certificates of deposit and other
time deposits ................. 720,664 722,967
Average interest rate ......... 5.00%
- ----------------------------------------------------------------------
Total interest bearing deposits .... 1,045,088 1,047,391
- ----------------------------------------------------------------------
Federal funds purchased and
securities sold under
repurchase agreements ......... 22,469 22,469
Average interest rate ......... 4.06%
Other borrowings ................... 3,047 3,047
Average interest rate ......... 4.76%
- ----------------------------------------------------------------------
Total interest bearing liabilities . 1,070,604 1,072,907
- ----------------------------------------------------------------------
Period GAP ............................. 310,202
Cumulative GAP .........................
Period GAP to total assets .............
Cumulative GAP to total assets .........
Cumulative interest earning assets
to cumulative interest bearing
liabilities .......................
- ----------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
ANALYSIS OF FINANCIAL CONDITION--(CONTINUED)
TAXES
Republic's income tax expense in interim reporting periods is determined by
estimating the effective federal and state tax rates and applying them to its
taxable income. The effective tax rate is principally affected by tax exempt
income.
Republic's effective tax rate for the three months ended March 31, 1999 and
March 31, 1998 was 36.5% and 31%, respectively. The effective rate for the first
quarter of 1998 was favorably affected by adjustments resulting from the
completion of a tax audit.
YEAR 2000
Almost all of Republic's operations are supported by accounting and
recordkeeping computerized systems and are dependent on the capability of
software applications and operating systems to function properly in the year
2000. In the fourth quarter of 1998, Republic converted, under a license with
its main existing software vendor, all of its loan, deposit and principal
accounting applications to a year 2000 compliant system, replacing an existing
licensing arrangement which was to expire in 1999. This new software required
additional hardware capacity. Costs associated with this endeavor are related to
previously scheduled software and hardware acquisitions and are not principally
the result of the year 2000 programming, as Republic would have incurred these
costs regardless of the year 2000 issue. Republic has evaluated the impact of
the year 2000 on other smaller application, PC computer hardware and other
equipment including telephone systems, elevators and air conditioning systems.
Republic believes that all essential information technology and non-information
technology systems will be year 2000 compliant. To this end Republic has
completed the assessment and renovation phases of it mission critical systems,
and tested the renovated mission critical systems. The new licensing agreement
and the additional hardware leases will increase 1999 operating costs by an
estimated $400,000. Other year 2000 related equipment expenditures for 1999 are
estimated at approximately $700,000 and are within the normal equipment
replacement and repair cycle of Republic.
Republic continues to assess through direct communication whether customers,
vendors, service providers and funds providers may have compliance issues which
will affect their interaction with Republic. This is an ongoing monitoring
process which will continue throughout 1999. Republic will take precautions,
including terminating relationships, to minimize the effect of counterpart
non-compliance. No assurance can be given that the systems of customers,
vendors, service providers and funds providers will be year 2000 compliant.
Republic's normal contingency plans include off-site system recovery at a
back-up facility, as well as manual processing capabilities.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations".
<PAGE>
PART II
- --------------------------------------------------------------------------------
OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
RECENT SALES OF REGISTERED SECURITIES
In February 1998, Republic sold 1,233,270 shares of its Common Stock and certain
selling shareholders sold 1,066,730 shares of Common Stock pursuant to a
registration statement on Form S-1 (Registration No. 333-41301) filed with the
Securities and Exchange Commission, which was declared effective on February 11,
1998 (the "Offering").
The Offering commenced on February 18, 1998 and was terminated subsequent to the
sale of all of the registered securities at a price to the public of $15.00 per
share. The Offering was underwritten by Keefe, Bruyette & Woods, Inc. and CIBC
Oppenheimer Corp.
Expenses incurred by Republic in connection with the sale of the shares of
Common Stock included the following:
- --------------------------------------------------------------------------------
SEC registration fee ................................... $ 10,856
NASD filing fee ........................................ 4,180
Nasdaq National Market listing fee ..................... 95,000
Legal fees and expenses ................................ 357,150
Accounting fees and expenses ........................... 260,400
Printing and engraving expenses ........................ 156,499
Transfer agent and registrar fees ...................... 3,500
Miscellaneous fees and expenses ........................ 12,479
--------
Total .................................................. $900,064
========
- --------------------------------------------------------------------------------
The net offering proceeds to Republic after deduction of the above expenses were
approximately $16.3 million and have temporarily been invested in securities
purchased under agreements to resell transactions with the Bank.
One of the selling shareholders in the Offering was Rebank Netherlands Antilles
N.V. ("Rebank"), which is owned by Roberto Isaias, Estefano Isaias and William
Isaias.
Roberto, Estefano and William Isaias directly or indirectly own, in the
aggregate, 12,550,285 shares, including 30,000 shares subject to option, or
59.1% of the issued and outstanding Common Stock, including the shares subject
to option by them. Roberto Isaias is the Chairman of the Board of Republic and
Estefano and William Isaias are directors of Republic. The net proceeds to
Rebank from the sale of 647,320 shares of Common Stock in the Offering were
$9,030,114.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(b) A form 8-K was filed on March 1, 1999 reporting under Item 5. Other
Events-Announcement of merger agreement between Republic and Union Planters
Bank, N.A.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 BANKING CORPORATION OF FLORIDA
Dated: May 13, 1999 By: /s/ BERNARDO M. ARGUDIN
-------------------------
Vice President and Chief Financial Officer
and Principal Accounting Officer
27 Republic Banking Corporation of Florida
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION AT MARCH 31, 1999 AND THE
CONSOLIDATED STATEMENT OF OPERATIONS FOR THREE MONTHS ENDED IN MARCH
31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 44,765
<INT-BEARING-DEPOSITS> 137
<FED-FUNDS-SOLD> 36,001
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 163,709
<INVESTMENTS-CARRYING> 189,459
<INVESTMENTS-MARKET> 190,595
<LOANS> 991,500
<ALLOWANCE> 13,994
<TOTAL-ASSETS> 1,508,453
<DEPOSITS> 1,297,547
<SHORT-TERM> 25,516
<LIABILITIES-OTHER> 12,094
<LONG-TERM> 0
0
0
<COMMON> 212
<OTHER-SE> 172,427
<TOTAL-LIABILITIES-AND-EQUITY> 1,508,453
<INTEREST-LOAN> 22,075
<INTEREST-INVEST> 5,765
<INTEREST-OTHER> 377
<INTEREST-TOTAL> 28,217
<INTEREST-DEPOSIT> 10,925
<INTEREST-EXPENSE> 11,798
<INTEREST-INCOME-NET> 16,419
<LOAN-LOSSES> 1,560
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 5,847
<INCOME-PRETAX> 6,907
<INCOME-PRE-EXTRAORDINARY> 6,907
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,365
<EPS-PRIMARY> 0.21
<EPS-DILUTED> 0.21
<YIELD-ACTUAL> 8.04
<LOANS-NON> 10,177
<LOANS-PAST> 137
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 12,402
<CHARGE-OFFS> 409
<RECOVERIES> 441
<ALLOWANCE-CLOSE> 13,994
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
