UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the period ended September 30, 1998
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 0-14671
REPUBLIC SECURITY FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
FLORIDA 59-2335075
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4400 Congress Avenue, West Palm Beach, FL 33407 (Address of
principal executive offices)(Zip Code)
Registrant's telephone number, including area code (561) 840-1200
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
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding as of November 9, 1998
Common Stock
par value $.01 per share 47,280,850
<PAGE>
REPUBLIC SECURITY FINANCIAL CORPORATION AND SUBSIDIARY
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995....................................1
for Forward-Looking Information
PART I: FINANCIAL INFORMATION
Item 1:
Condensed Consolidated Statements of Financial Condition
September 30, 1998 and December 31, 1997.............................................................2
Condensed Consolidated Statements of Income for the
three months ended September 30, 1998 and 1997.......................................................3
Condensed Consolidated Statements of Income for the
nine months ended September 30, 1998 and 1997........................................................4
Condensed Consolidated Statements of Comprehensive Income for the
three and nine months ended September 30, 1998 and 1997..............................................5
Condensed Consolidated Statements of Shareholders' Equity
for the nine months ended September 30, 1998
and the year ended December 31, 1997.................................................................6
Condensed Consolidated Statements of Cash Flows for the
nine months ended September 30, 1998 and 1997........................................................7
Notes to Condensed Consolidated Financial Statements.................................................8
Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations...............................................................................12
Item 3: Quantitative and Qualitative Disclosure about Market Risk...........................................16
PART II: OTHER INFORMATION
Item 1: Legal Proceedings...................................................................................17
Item 2: Changes in Securities and Use of Proceeds...........................................................17
Item 3: Defaults Upon Senior Securities.....................................................................17
Item 4: Submission of Matters to a Vote of Security Holders.................................................17
Item 5: Other Information...................................................................................17
Item 6 Exhibits and Reports on Form 8-K....................................................................18
Signatures..........................................................................................19
</TABLE>
<PAGE>
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
for Forward-Looking Information
Information in this report contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 that are subject
to risks and uncertainties that could cause the Company's actual results to
differ materially from those projected in forward-looking statements. The use of
forward-looking statements can be identified by statements that express or
involve discussions as to expectations, beliefs, plans, objectives, assumptions
or future events or performance (often, but not always, through the use of words
or phrases such as "will likely result," "are expected to," "will continue," "is
anticipated," "estimated," "projection," or "outlook"), are not historical facts
and may be forward-looking. Such statements involve estimates, assumptions, and
uncertainties which include, but are not limited to, overall business
conditions, particularly in the business markets in which Republic Security
Financial Corporation and its wholly owned subsidiary, Republic Security Bank,
operate; general economic conditions, changes in interest rates, deposit flows,
loan demand, real estate values, and competition; changes in accounting
principles, policies, or guidelines; changes in legislation or regulation; and
other economic, competitive, governmental, regulatory, and technological factors
that affect the Company's operations, pricing, products, and services. Other
factors, such as the general state of the economy, could also cause actual
results to vary materially from the future results covered in such
forward-looking statements. Accordingly, any such statements are qualified in
their entirety by reference to, and are accompanied by, the above mentioned
important factors that could cause the Company's actual results to differ
materially from those contained in the forward-looking statements of the Company
made by or on behalf of the Company.
All such factors are difficult to predict, contain uncertainties which may
materially affect actual results and are beyond the control of the Company.
1
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1:
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
- -----------------------------------------------------------------------------------------------------------------------------------
September 30, December 31,
1998 1997
(Amounts in thousands except share and per share data) (unaudited)
- ------------------------------------------------------------------------------------------------ ----------------- ----------------
<S> <C> <C>
Assets
Cash and amounts due from depository institutions $28,572 $60,867
Interest-bearing deposits in other financial institutions 56,256 75,473
Federal funds sold 7,665
- ------------------------------------------------------------------------------------------------ ----------------- ----------------
Total cash and cash equivalents 84,828 144,005
Investments available-for-sale 149,573 129,748
Investments held to maturity (market value of $11,688 and $10,305 at September 30, 1998 and December
31, 1997, respectively) 11,624 10,277
Loans - net 766,080 729,525
Loans held for sale (Market value of $32,738 and $13,828 at September 30, 1998 and December 31, 1997,
respectively) 32,552 13,565
Property and equipment - net 28,579 23,445
Other real estate owned - net 3,317 6,046
Goodwill - net 6,690 7,110
Loan servicing rights - net 1,508 1,519
Accrued interest receivable 6,058 5,517
Other assets 29,507 20,479
- ------------------------------------------------------------------------------------------------ ----------------- ----------------
Total $1,120,316 $1,091,236
- ------------------------------------------------------------------------------------------------ ----------------- ----------------
Liabilities and Shareholders' Equity
Deposits $902,035 $870,002
Federal Home Loan Bank advances 76,979 88,397
Securities sold under agreements to repurchase 8,228 14,443
Advances from borrowers for taxes and insurance 9,165 3,841
Bank drafts payable 12,118 5,806
Other liabilities 12,258 14,565
- ------------------------------------------------------------------------------------------------ ----------------- ----------------
Total liabilities 1,020,784 997,054
- ------------------------------------------------------------------------------------------------ ----------------- ----------------
Commitments and Contingencies
Preferred stock issued by pooled company $7.13 stated value; 300,000 shares
authorized:
Series "A" - 111,660 shares issued and outstanding at December 31, 1997 796
Preferred stock $10.00 stated value; 10,000,000 shares authorized:
Series "C" - 948,996 shares issued and outstanding at December 31, 1997 9,490
Common stock $.01 par value; 100,000,000 shares authorized; 25,532,224 and 23,713,111 shares issued
and outstanding at September 30, 1998 and December 31, 1997, respectively 255 237
Additional paid-in capital 71,540 60,233
Retained earnings 26,966 22,847
Unrealized gain on investments available-for-sale, net of taxes 771 579
- ------------------------------------------------------------------------------------------------ ----------------- ----------------
Total shareholders' equity 99,532 94,182
- ------------------------------------------------------------------------------------------------ ----------------- ----------------
Total $1,120,316 $1,091,236
- ------------------------------------------------------------------------------------------------ ----------------- ----------------
See notes to condensed consolidated financial statements.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
- -----------------------------------------------------------------------------------------------------------------------------------
Three months ended September 30,
(unaudited)
(Amounts in thousands except per share data) 1998 1997
- ---------------------------------------------------------------------------------------- ---------------------- -------------------
<S> <C> <C>
Interest Income:
Interest and fees on loans $17,140 $16,064
Interest and dividends on investments 3,170 3,279
- ---------------------------------------------------------------------------------------- ---------------------- -------------------
20,310 19,343
- ---------------------------------------------------------------------------------------- ---------------------- -------------------
Interest Expense:
Interest on deposits 7,991 7,442
Interest on borrowings 1,208 679
- ---------------------------------------------------------------------------------------- ---------------------- -------------------
9,199 8,121
- ---------------------------------------------------------------------------------------- ---------------------- -------------------
Net interest income 11,111 11,222
Provision for loan losses 1,400 81
- ---------------------------------------------------------------------------------------- ---------------------- -------------------
Net interest income after provision for loan losses 9,711 11,141
Non-interest Income:
Service charges on deposit accounts 1,775 1,582
Gain on sale of loans 310 146
Gain on sale of investments available-for-sale 262
Other income 903 887
- ---------------------------------------------------------------------------------------- ---------------------- -------------------
2,988 2,877
Operating Expenses:
Employee compensation and benefits 4,334 5,324
Occupancy and equipment 1,966 1,768
Professional fees 197 824
Advertising and promotions 178 100
Communications 298 261
Data processing 409 349
Insurance 133 111
Other 1,131 1,225
Merger expenses 2,098
- ---------------------------------------------------------------------------------------- ---------------------- -------------------
10,744 9,962
Income before income taxes 1,955 4,056
Provision for income taxes 723 1,065
- ---------------------------------------------------------------------------------------- ---------------------- -------------------
Net income $1,232 $2,991
- ---------------------------------------------------------------------------------------- ---------------------- -------------------
PER SHARE DATA:
Basic earnings per common share $0.05 $0.12
Diluted earnings per common share $0.05 $0.11
Dividends per common share $0.06 $0.05
Average common shares and common stock equivalents outstanding 26,034 24,948
- ---------------------------------------------------------------------------------------- ---------------------- -------------------
See notes to condensed consolidated financial statements.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
- -----------------------------------------------------------------------------------------------------------------------------------
Nine months ended September 30,
(unaudited)
(Amounts in thousands except per share data) 1998 1997
- ---------------------------------------------------------------------------------------- ---------------------- -------------------
<S> <C> <C>
Interest Income:
Interest and fees on loans $51,890 $47,060
Interest and dividends on investments 8,476 9,463
- ---------------------------------------------------------------------------------------- ---------------------- -------------------
60,366 56,523
- ---------------------------------------------------------------------------------------- ---------------------- -------------------
Interest Expense:
Interest on deposits 22,849 21,557
Interest on borrowings 3,377 1,972
- ---------------------------------------------------------------------------------------- ---------------------- -------------------
26,226 23,529
- ---------------------------------------------------------------------------------------- ---------------------- -------------------
Net interest income 34,140 32,994
Provision for loan losses 1,599 918
- ---------------------------------------------------------------------------------------- ---------------------- -------------------
Net interest income after provision for loan losses 32,541 32,076
Non-interest Income:
Service charge on deposit accounts 5,103 4,711
Gain on sale of loans 1,026 343
Gain on sale of investments available-for-sale 381 436
Other income 2,465 2,466
- ---------------------------------------------------------------------------------------- ---------------------- -------------------
8,975 7,956
Operating Expenses:
Employee compensation and benefits 13,306 14,674
Occupancy and equipment 5,626 5,268
Professional fees 730 1,904
Advertising and promotions 598 468
Communications 958 868
Data processing 1,299 971
Insurance 484 526
Other 3,601 4,215
Merger expenses 2,251 3,979
- ---------------------------------------------------------------------------------------- ---------------------- -------------------
28,853 32,873
Income before income taxes 12,663 7,159
Provision for income taxes 4,650 1,362
- ---------------------------------------------------------------------------------------- ---------------------- -------------------
Net income $8,013 $5,797
- ---------------------------------------------------------------------------------------- ---------------------- -------------------
PER SHARE DATA:
Basic earnings per common share $0.32 $0.22
Diluted earnings per common share $0.31 $0.22
Dividends per common share $0.16 $0.14
Average common shares and common stock equivalents outstanding 26,173 23,907
- ---------------------------------------------------------------------------------------- ---------------------- -------------------
See notes to condensed consolidated financial statements.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
- -----------------------------------------------------------------------------------------------------------------------------------
Three Months Ended September 30,
(unaudited)
(Amounts in thousands) 1998 1997
- ---------------------------------------------------------------------------------------- ---------------------- -------------------
<S> <C> <C>
Net income $1,232 $2,991
Other comprehensive income, net of tax:
Unrealized gain on investments available-for-sale arising during the period
net of tax of $158 and $166, respectively 428 449
Reclassification adjustment for amounts realized on sale of investments included in
net income, net of taxes of ($97) (165)
- ---------------------------------------------------------------------------------------- ---------------------- -------------------
Comprehensive income $1,660 $3,275
- ---------------------------------------------------------------------------------------- ---------------------- -------------------
Nine Months Ended September 30,
(unaudited)
(Amounts in thousands) 1998 1997
- ---------------------------------------------------------------------------------------- ---------------------- -------------------
Net income $8,013 $5,797
Other comprehensive income, net of tax:
Unrealized gain (loss) on investments available-for-sale arising during the
period, net of tax of $71 and ($91), respectively 192 (246)
Reclassification adjustment for amounts realized on sale of investments included in
net income, net of taxes of ($141) and ($161), respectively (240) (275)
- ---------------------------------------------------------------------------------------- ---------------------- -------------------
Comprehensive income $7,965 $5,276
- ---------------------------------------------------------------------------------------- ---------------------- -------------------
See notes to condensed consolidated financial statements.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
- -----------------------------------------------------------------------------------------------------------------------------------
Unrealized Gain
(Loss) on
Additional Investments
Preferred Common Paid-in Retained Available-for-
(Amounts in thousands except share data) Stock Stock Capital Earnings Sale, Net of Taxes
- -------------------------------------------------- -------------- -------------- -------------- -------------- --------------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996 $11,146 $226 $57,316 $26,445 ($96)
Exercise of options -924,624 shares 9 2,032
Issuance of stock grants - 3,000 shares 27
Conversion of preferred stock series "C" into
common stock - 133,306 shares (860) 2 858
Cash dividends - common stock (2,175)
Cash dividends paid by pooled companies - common stock (2,760)
Cash dividends - preferred stock series " C" (708)
Cash dividends - pooled company preferred stock
series "A" (56)
Net income 2,101
Change in unrealized gain (loss) on investments
available-for-sale, net of taxes 675
- -------------------------------------------------- -------------- -------------- -------------- -------------- --------------------
Balance, December 31, 1997 10,286 237 60,233 22,847 579
Exercise of options - 236,632 shares 2 1,044
401(k) plan - 4,474 shares 43
Conversion of preferred stock series "C" into
common stock - 1,463,347 shares (9,440) 15 9,425
Conversion of pooled company preferred stock into
common stock - 111,660 shares (796) 1 795
Cash redemption of preferred stock series "C" (50)
Cash dividends - common stock (3,882)
Cash dividends - preferred stock series "C" (202)
Cash dividends - pooled company preferred stock (27)
Net income 8,013
Income for three months ended December 31, 1997 for
pooled company 217
Change in unrealized gain on investments
available-for-sale, net of taxes 192
- -------------------------------------------------- -------------- -------------- -------------- -------------- --------------------
Balance, September 30, 1998 (unaudited) $255 $71,540 $26,966 $771
- -------------------------------------------------- -------------- -------------- -------------- -------------- --------------------
See notes to condensed consolidated financial statements.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
- -----------------------------------------------------------------------------------------------------------------------------------
Nine Months Ended September 30,
(unaudited)
(Amounts in thousands) 1998 1997
- ---------------------------------------------------------------------------------- ----------------------- ------------------------
<S> <C> <C>
Operating Activities:
Net income $8,013 $5,797
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses 1,599 918
Depreciation and amortization 2,404 1,935
Gain on sale of investments available-for-sale (381) (436)
Gain on sale of loans (1,026) (343)
Loans originated for sale (21,078) (13,669)
Purchase of loans held for sale (13,552) (16,155)
Sale of loans and loan participation certificates 47,559 41,145
Other - net 1,381 1,428
- ---------------------------------------------------------------------------------- ----------------------- ------------------------
Net cash provided by operating activities 24,919 20,620
- ---------------------------------------------------------------------------------- ----------------------- ------------------------
Investing Activities:
Purchases of investments available-for-sale (134,327) (55,735)
Proceeds from sales and maturities of investments available-for-sale 78,615 67,851
Maturities and calls of investments held to maturity 4,013 3,492
Purchases of investments held to maturity (8,944)
Loans purchased for investment (65,855)
Net increase in loans (4,726) (42,744)
Purchase of property and equipment (6,997) (4,082)
Other - net 21,900 1,688
- ---------------------------------------------------------------------------------- ----------------------- ------------------------
Net cash used in investing activities (107,377) (38,474)
- ---------------------------------------------------------------------------------- ----------------------- ------------------------
Financing Activities:
Net increase in demand deposits, NOW accounts, Money Market accounts and savings
accounts 8,532 7,525
Net increase in certificates of deposits 23,501 5,449
(Decrease) increase in FHLB advances (11,418) 11,657
Other - net (9,287) (3,989)
- ---------------------------------------------------------------------------------- ----------------------- ------------------------
Net cash provided by financing activities 11,328 20,642
- ---------------------------------------------------------------------------------- ----------------------- ------------------------
(Decrease) increase in cash and cash equivalents (71,130) 2,788
Adjustments to reconcile for different year end of pooled company (see Note 2):
Net income for three months ended December 31, 1997 217
Other cash flows-net 11,736
- ---------------------------------------------------------------------------------- ----------------------- ------------------------
Cash and cash equivalents at beginning of period 144,005 109,330
- ---------------------------------------------------------------------------------- ----------------------- ------------------------
Cash and cash equivalents at end of period $84,828 $112,118
- ---------------------------------------------------------------------------------- ----------------------- ------------------------
For purposes of reporting cash flows, cash and cash equivalents include cash on
hand, amounts due from banks and federal funds
sold. Generally, federal funds are purchased and sold for one-day periods. The Company paid $2,342 and $2,385 in income tax
payments during the nine months ended September 30, 1998 and September 30, 1997, respectively. The Company paid $60,709 and
$56,472 in interest on deposits and other borrowings during the nine months ended September 30, 1998 and 1997, respectively. The
Company had $2,400 and $2,826 of transfers from loans to OREO during the nine
months ended September 30, 1998 and 1997,
respectively. In addition, the Company transferred approximately $27.5 million
of loans acquired in the Unifirst merger to loans held for sale at closing (July
2, 1998).
- -----------------------------------------------------------------------------------------------------------------------------------
See notes to condensed consolidated financial statements
</TABLE>
7
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
include the accounts of Republic Security Financial Corporation (the
"Company" or "RSFC") and its wholly-owned subsidiary, Republic Security
Bank (the "Bank" or "Republic"), and have been retroactively restated to
include the accounts and results of operations of Unifirst FSB
("Unifirst"), a federal savings bank which merged into Republic on July 2,
1998 (See Note 2). In the opinion of the Company's management, the
financial statements contain all adjustments (consisting of normal
recurring accruals) considered necessary to present fairly the consolidated
financial position of Republic Security Financial Corporation and its
subsidiary as of September 30, 1998. The December 31, 1997 consolidated
financial position is combined with the statements of financial condition
of Unifirst as of September 30, 1997. The condensed consolidated statements
of income and cash flows of RSFC for the three and nine months ended
September 30, 1997 is combined with the statements of income of Unifirst
for the three and nine months ended June 30, 1997.
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. Operating results
for the nine months ended September 30, 1998 are not necessarily indicative
of the results that may be expected for the year ending December 31, 1998.
For further information, refer to the consolidated financial statements and
footnotes thereto included in Republic Security Financial Corporation's
annual report on Form 10-K for the year ended December 31, 1997.
The balance sheet at December 31, 1997 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
2. Merger and Potential Mergers
On September 14, 1998, RSFC entered into a definitive agreement
whereby Northside Bank of Tampa ("Northside"), headquartered in Tampa,
Florida, is expected to merge into the Bank, in a stock-for-stock
transaction accounted for as a pooling-of-interests. Northside has assets
of $65.5 million, loans of $37.9 million and deposits of $55.6 million.
Under the terms of the agreement, shareholders of Northside will
receive 3.64 shares of RSFC's common stock for each share of Northside
common stock. RSFC expects to issue approximately 2.1 million shares of its
common stock for all of the outstanding shares of Northside. The
transaction is subject to shareholder approval of Northside, receipt of
state regulatory approval and other customary closing conditions. Federal
Reserve Bank approval was received in November 1998. The merger is expected
to close in December 1998.
On September 8, 1998, the Bank entered into a definitive agreement to
acquire the Florida branch offices of Household Bank, f.s.b. ("Household"),
a wholly owned subsidiary of Household International, Inc. Under the terms
of the agreement, Republic Security Bank expects to acquire two branch
locations with approximately $32 million in loans and approximately $19
million in deposits. The Bank will pay a purchase price equal to 4% times
the deposit balances outstanding at the closing date and the consideration
will be paid in cash.
8
<PAGE>
The transaction is subject to approval by the State of Florida Banking
Department and is expected to close in November 1998. Approval from the
Federal Reserve Bank was received in October 1998.
On August 24, 1998, RSFC entered into a definitive agreement to
acquire Newberry Bank ("Newberry"), a Florida state, commercial bank,
headquartered in Newberry, Florida. Newberry has approximately $37 million
in assets, loans of $28 million and deposits of $33 million. Under the
terms of the agreement the purchase price equals two times Newberry's
tangible equity as of the month end prior to the closing date. The
transaction will be accounted for as a purchase business combination and
approximately $3.0 in goodwill will be recorded related to the transaction.
The transaction is subject to shareholder approval of Newberry,
receipt of state regulatory approval and other customary closing
conditions. The merger is expected to close in the fourth quarter of 1998.
Federal Reserve approval was received in October 1998.
On July 2, 1998, RSFC issued 1,245,196 shares of its common stock in
exchange for all outstanding common stock of Unifirst. This business
combination has been accounted for as a pooling-of-interests and,
accordingly, the unaudited condensed consolidated financial statements for
periods prior to the combination have been restated to include the accounts
and results of operations of Unifirst. In connection with the Unifirst
merger the Company incurred approximately $2.2 million in merger expenses.
The results of operations previously reported by the separate
companies and the combined amounts presented in the accompanying unaudited
condensed consolidated financial statements are summarized below.
<TABLE>
<CAPTION>
Six months ended
June 30,
1998 1997
- ----------------------------------------------- -------------------- ------------------
(unaudited)
<S> <C> <C>
Revenue:
RSFC $26,993 $24,008
Unifirst 1,823 1,911
- ----------------------------------------------- -------------------- ------------------
Combined $28,816 $25,919
- ----------------------------------------------- -------------------- ------------------
Net Income:
RSFC 1 $6,415 $2,394
Unifirst 366 277
- ----------------------------------------------- -------------------- ------------------
Combined $6,781 $2,671
- ----------------------------------------------- -------------------- ------------------
</TABLE>
See Note 7 for discussion of the merger with First Palm Beach Bancorp,
Inc. which was consummated on October 29, 1998.
3. Non-Performing Assets and Allowance for Loan Losses
At September 30, 1998, the Bank had $9.8 million in non-performing
assets (loans 90 days or more past due, other real estate owned and
repossessed assets). The provision for loan losses was $1,599,000 and
$918,000 for the nine months ended September 30, 1998 and 1997,
respectively. The provisions for loan losses include charges of $1.2
million and $400,000 for the nine months ended September 30, 1998 and 1997,
respectively, to conform Unifirst and Family Bank's accounting and credit
policies to those of RSFC.
- --------
1 The six months ended June 30, 1997, includes merger costs of $2.5
million, net of taxes, related to the Family Bank acquisition. The merger
costs consist of approximately $1.6 million in professional fees, $1
million in data processing conversion costs and $1.4 million in costs
associated with the integration of operations and other expenses.
9
<PAGE>
Although management uses its best judgement in underwriting each loan,
industry experience indicates that a portion of the Bank's loans will
become delinquent. Regardless of the underwriting criteria utilized by
financial institutions, losses may be experienced as a result of many
factors beyond their control including, among other things, changes in
market conditions affecting the value of security and unrelated problems
affecting the credit of the borrower. Due to the concentration of loans in
South Florida, adverse economic conditions in this area could result in a
decrease in the value of a significant portion of the Bank's collateral.
In the normal course of business, the Bank has recognized and will
continue to recognize losses resulting from the inability of certain
borrowers to repay loans and the insufficient realizable value of
collateral securing such loans. Accordingly, management has established an
allowance for loan losses, which totaled $7.8 million at September 30,
1998.
The allowance for credit losses is maintained at a level believed
adequate by management to absorb estimated probable credit losses.
Management's periodic evaluation of the adequacy of the allowance is based
on the Bank's past loan loss experience, known and inherent risks in the
portfolio, adverse situations that may affect the borrower's ability to
repay (including the timing of future payments), the estimated value of any
underlying collateral, composition of the loan portfolio, current economic
conditions, and other relevant factors. This evaluation is inherently
subjective as it requires material estimates including the amounts and
timing of future cash flows expected to be received on impaired loans that
may be susceptible to significant change.
4. Commitments and Contingencies
Commitments to extend credit are agreements to lend to a customer as
long as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses and may require the payment of a fee. The total commitment amounts
do not necessarily represent future cash requirements as some commitments
expire without being drawn upon. The Bank evaluates each customer's credit
worthiness on a case by case basis. The amount of collateral obtained, if
deemed necessary by the Bank, upon extension of credit is based on
management's credit evaluation of the counter party.
At September 30, 1998, the Bank had adjustable rate commitments to
extend credit of approximately $175.3 million, excluding the undisbursed
portion of loans-in-process. These commitments are primarily for commercial
lines of credit secured by commercial real estate or other business assets
and for one-to-four family residential properties.
In addition to the above commitments and contingencies, there are
various legal actions pending against the Company that management has
reviewed with legal counsel. In the opinion of management of the Company,
amounts accrued for awards or assessments in connection with these matters
are adequate and ultimate resolution of these matters will not have a
material effect on the Company's consolidated financial position, results
of operations or cash flows.
10
<PAGE>
5. Earnings per Common Share
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
Three Months Ended Nine months ended
September 30, September 30,
(unaudited)
(In thousands except per share data) 1998 1997 1998 1997
- --------------------------------------------------------------------- -------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Numerator:
Net income $1,232 $2,991 $8,013 $5,797
Preferred stock dividends (195) (229) (584)
- --------------------------------------------------------------------- -------------- ------------- -------------- --------------
Numerator for basic earnings per share - income available to common
stockholders 1,232 2,796 7,784 5,213
Effect of dilutive securities:
Preferred stock dividends 229
- --------------------------------------------------------------------- -------------- ------------- -------------- --------------
Numerator for diluted earnings per share - income available to common
stockholders after assumed conversions $1,232 $2,796 $8,013 $5,213
===================================================================== ============== ============= ============== ==============
Denominator:
Denominator for basic earnings per share - weighted-average shares 25,532 24,168 24,672 23,055
Effective of dilutive securities:
Employee stock options 502 780 566 852
Convertible preferred stock 935
- --------------------------------------------------------------------- -------------- ------------- -------------- --------------
Dilutive potential common shares 502 780 1,501 852
- --------------------------------------------------------------------- -------------- ------------- -------------- --------------
Denominator for diluted earnings per share - adjusted weighted-average
shares and assumed conversions 26,034 24,948 26,173 23,907
===================================================================== ============== ============= ============== ==============
Basic earnings per share $0.05 $0.12 $0.32 $0.22
Diluted earnings per share $0.05 $0.11 $0.31 $0.22
</TABLE>
6. Comprehensive Income
On January 1, 1998, the Company adopted Financial Accounting Standards
No. 130 ("FAS 130"), Reporting Comprehensive Income. FAS 130 establishes
standards for reporting and displaying comprehensive income and its
components. The adoption of FAS 130 did not have a material impact on the
Company. All of the Company's other comprehensive income relates to net
unrealized gains (losses) on available-for-sale investments.
7. Subsequent Events
On October 29, 1998, RSFC consummated the acquisition of First Palm
Beach Bancorp, Inc. ("First Bank"). This business combination was accounted
for as a pooling-of-interests and RSFC issued 21,731,248 shares of its
common stock for all outstanding shares of First Bank. First Bank has
assets of approximately $1.8 billion, total loans of $1.1 billion, total
deposits of $1.3 billion and total equity of $128 million.
11
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Comparison of the Three and Nine months ended September 30, 1998 and 1997
Results of Operations
The Company had net income of $1.2 million or $.05 diluted earnings per
common share for the three months ended September 30, 1998, compared to $3.0
million or $.11 diluted earnings per common share for the three months ended
September 30, 1997. The decrease in net income is due to pretax merger related
expenses of approximately $3.3 million associated with the acquisition of
Unifirst Federal Savings Bank on July 2, 1998. Net interest income decreased
$111,000 or 1% for the three months ended September 30, 1998 compared to the
three months ended September 30, 1997. Non-interest income increased $111,000 or
4.0% while operating expenses (excluding merger expenses) decreased $1.3 million
or 13% for the three months ended September 30, 1998 compared to the three
months ended September 30, 1997.
The Company had net income of $8.0 million or $.31 diluted earnings per
common share for the nine months ended September 30, 1998, compared to net
income of $5.8 million or $.21 diluted earnings per common share for the nine
months ended September 30, 1997. Net interest income increased $1.1 million or
4% for the nine months ended September 30, 1998 compared to the nine months
ended September 30, 1997. Non-interest income increased $1.0 million or 13%
while operating expenses (excluding merger expenses) decreased $2.3 million or
8% for the nine months ended September 30, 1998 compared to the nine months
ended September 30, 1997.
Net Interest Income
Net interest income for the three months ended September 30, 1998 decreased
$111,000 compared to the three months ended September 30, 1997 due to an
increase of $1.0 million in interest income offset by an increase of $1.1
million in interest expense. Interest income increased due to an increase of
$88.8 million in interest-earning assets due primarily to an increase in average
loan outstandings offset by a decline in approximately 30 basis points in asset
yield. The decline in asset yield was due partially to premiums related to loan
prepayments and interest in arrears recognized on Unifirst loans which were more
than 90 days past due and still accruing interest at closing. The increased
premium amortization and the Unifirst interest in arrears are not expected to
recur as the majority of loans with premiums have paid off and loans are placed
on non accrual at 90 days past due. The reduction in asset yield for the three
months ended September 30, 1998 compared to the three months ended September 30,
1997 due to lower interest rates is approximately 15 basis points. Interest
expense increased due to an increase in interest-bearing liabilities as the rate
paid on interest-bearing liabilities remained unchanged.
Net interest income increased $1.1 million for the nine months ended
September 30, 1998 compared to the nine months ended September 30, 1997 due to
an increase of $3.8 million in interest income offset by an increase of $2.7
million in interest expense. Interest income increased primarily due to an
increase in average loans outstanding offset by a reduction in the yield on
interest-earning assets of approximately 12 basis points for the nine months
ended September 30, 1998 compared to the nine months ended September 30, 1997.
Interest expense increased due to an increase in interest bearing liabilities of
approximately $77 million. The increase is related to an increase in deposits as
well as an increase in FHLB advances of approximately $50 million used to fund
loan and investment purchases.
Provision for Loan Losses
The provision for loan losses increased $1.3 million and $681,000
respectively, for the three and nine months ended September 30, 1998 compared to
the three and nine months ended September 30, 1997, due primarily to a $1.2
million adjustment to the allowance for loan losses to conform Unifirst's
accounting and credit policies related to loan loss reserves to the Bank's
policies.
12
<PAGE>
<PAGE>
Management's Discussion and Analysis
of Financial Condition and Results of Operations (Continued)
- -------------------------------------------------------------------------------
Non-Interest Income
Non-interest income increased $111,000 for the three months ended September
30, 1998 compared to the three months ended September 30, 1997 due to an
increase of $164,000 in gain on sale of loans, an increase of $193,000 in
service charges on deposit accounts and a decrease of $262,000 in gain on sale
of investments. The increase in service charges on deposit accounts is primarily
due to the increase in deposit accounts and an increase in the usage of products
as no significant fee increases have occurred. The increase in gain on sale of
loans is due to an increase in the amount of loans sold during the three months
ended September 30, 1998 compared to September 30, 1997. There were no
investment sales during the quarter ended September 30,1998.
Non-interest income increased $1.0 million for the nine months ended
September 30, 1998, compared to the nine months ended September 30, 1997 due to
an increase of $683,000 in gain on sale of loans, an increase of $392,000 in
service charges on deposit accounts and a decrease of $55,000 in gain on sale of
investments. The increase in gain on sale of loans is due to an increase in the
amount of loans sold during the nine months ended September 30, 1998 compared to
September 30, 1997. The increase in service charges on deposit accounts is due
to an increase in transaction accounts as well as an increase in the usage of
products. The decrease in the gain on the sale of investments for the nine
months ended September 30, 1998 is due to a decrease in the amount of
investments sold during the nine months ended September 30, 1998 compared to
September 30, 1997.
Operating Expenses
Operating expenses (excluding merger expenses) decreased $1.3 million or
13% for the three months ended September 30, 1998 compared to the three months
ended September 30, 1997. The decrease in operating expenses is primarily due to
decreases of $990,000 in employee compensation and benefits, $627,000 in
professional fees and $94,000 in other expenses offset by an increase of $60,000
in data processing fees, an increase of $198,000 in occupancy expenses and an
increase of $78,000 in advertising and promotion expense. The decrease in
employee compensation and benefits is due to a decrease of $900,000 related to
the expense for Stock Appreciation Rights (SARs) accrual for the three months
ended September 30, 1998 compared to the three months ended September 30, 1997.
SARs expense was lower for the three months ended September 30, 1998 compared to
the three months ended September 30, 1997 as no additional accrual was necessary
because the market price of RSFC common stock has declined since September 30,
1997. In addition, in order to restore the purpose of the SAR's grants of
providing long- term incentive for the board members, in June 1998, the Company
paid a total of $171,000 to the SAR holders to extend the original vesting
period to seven years from various shorter vesting periods. Professional fees
decreased for the three months ended September 30, 1998 compared to the three
months ended September 30, 1997 primarily due to decrease in legal expenses
related to two legal matters, and problem loans as well as a settlement payment
made in August 1997. Other operating expenses decreased primarily due to a
reduction in OREO expenses associated with Unifirst (a pooled company). The
increase in data processing fees is primarily due to the addition of data
processing for Family Bank and County National Bank in September 1997 and March
1998, respectively. Occupancy expense increased for the three months ended
September 1998 compared to September 1997 primarily due to the opening of five
new branches located in Palm Beach and Broward counties since September 1997.
Operating expenses (excluding merger costs) decreased $2.3 million or 8%
for the nine months ended September 30, 1998 compared to the nine months ended
September 30, 1997. The decrease in operating expenses is primarily due to
decreases of $1.4 million in employee compensation and benefits, $1.2 million in
professional fees and a decrease of $614,000 in other expenses offset by an
increase of $328,000 in data processing fees, an increase of $90,000 in
communication expenses and an increase of $358,000 in occupancy expense. The
decrease in employee compensation and benefits is primarily due to a decrease of
$1.4 million in SAR's expense for the nine months ended September 30, 1998
compared to the nine months ended September 30, 1997 duet to the market price of
RSFC common
13
<PAGE>
Management's Discussion and Analysis
of Financial Condition and Results of Operations (Continued)
- -------------------------------------------------------------------------------
stock and the extension of the vesting period related to the SARs. The decrease
in professional fees is primarily due to fees paid in relation to a County
National Bank (a pooled company) litigation matter which was settled in December
1996 and a decrease in legal fees paid in relation to pre-foreclosure expenses
related to Unifirst (a pooled company). Other operating expenses decreased
primarily due to non-recurring expenses of $100,000 associated with the startup
of the Trust and Investment Services division and a $150,000 fixed asset
write-off associated with the relocation of a branch in 1997. In addition, other
real estate owned expenses decreased due to the disposition of certain OREO
assets. The increase in data processing fees is primarily due to the addition of
data processing for Family Bank from an in-house EDP system to the Bank's
outside data processor in September 1997 and for County National Bank in March
1998. Occupancy expense increased for the nine months ending September 30, 1998
primarily due to the opening of six new branches located in Palm Beach and
Broward counties as well as the opening of the Bank's new Trust and Investments
Division in late 1997.
Provision for Income Taxes
The provision for income taxes decreased $342,000 for the three months
ended September 30, 1998 compared to the three months ended September 30, 1997
due to a decrease of $2.1 million in income before taxes for the three months
ended September 30, 1998 offset by an increase in the effective tax rate from
26% for the three months ended September 30, 1997 to 37% for the three months
ended September 30, 1998. The increase in the effective tax rate is due to a
reduction of the allowance for deferred tax assets in the three months ended
September 30, 1997.
The provision for income taxes increased $3.3 million for the nine months
ended September 30, 1998 compared to the nine months ended September 30, 1997
due to a $5.5 million increase in income before income taxes and an increase in
the effective tax rate from 19% for the nine months ended September 30, 1997 to
37% for the nine months ended September 30, 1998. The effective tax rate was
lower for the nine months ended September 30, 1997 due to a $1.1 million
reduction of the allowance for deferred tax assets in the nine months ended
September 30, 1997.
Liquidity, Sources of Capital and Capital Requirements
As a member of the Federal Home Loan Bank System, the Bank is subject to
regulations which require it to maintain "long term" liquidity ratios. The
majority of the liquid assets of the Bank are investments available-for-sale and
deposits with the Federal Home Loan Bank of Atlanta. The Bank was in compliance
with liquidity requirements during the three and nine months ended September 30,
1998.
On certain occasions, demand for loan funds may exceed cash available from
deposits. On such occasions, the Bank may borrow funds from the Federal Home
Loan Bank of Atlanta, draw on lines of credit with commercial banks and/or enter
into repurchase agreements on eligible investments.
Cash and cash equivalents decreased by approximately $71.1 million during
the nine months ended September 30, 1998. The decrease in cash is due primarily
to increases in loans and investments and a decrease in FHLB advances offset by
a $32.0 million increase in deposits and $24.9 million in cash provided by
operating activities.
The following table shows the capital amounts and ratios of the Bank at
September 30, 1998:
<TABLE>
<CAPTION>
(Dollars in thousands) Amount Ratio
- -------------------------------------------------------------------------- ------------------------ ------------------------
<S> <C> <C>
Total risk based capital $90,528 11.56%
Tier 1 risk based capital $82,362 10.52%
Leverage capital $82,362 7.50%
- -------------------------------------------------------------------------- ------------------------ ------------------------
</TABLE>
14
<PAGE>
Management's Discussion and Analysis
of Financial Condition and Results of Operations (Continued)
- -------------------------------------------------------------------------------
At September 30, 1998, the Bank exceeded each of the regulatory capital
requirements and was considered a "well capitalized" institution for regulatory
purposes.
Financial Condition
As of September 30, 1998, total assets increased approximately $29.1
million or 2.7% from December 31, 1997. Loans-net and loans held for sale
increased approximately $55.5 million, investments increased approximately $21.2
million and cash and cash equivalents decreased $59.2 million. In addition
property and equipment-net increased $5.1 million due to the purchase of land
and buildings associated with new and future branches and equipment for new
branches. Other assets increased approximately $9.0 million due to a $2.9
million purchase of life insurance policies related to the directors retirement
plan, a $1.7 million increase in prepaid dealer rebates associated with indirect
consumer lending and a $5.0 million increase in accounts receivable associated
with the sale of assets. Other real estate owned decreased $2.7 million due to
OREO sales by Unifirst (a pooled company) during 1998. The overall increase in
assets was funded primarily by an increase of $32 million in deposits. Advances
from borrowers for taxes and insurance increased $5.3 million due to the
accumulation of escrow payments related primarily to residential loans and bank
drafts payable increased $6.3 million related to loan funding checks issued at
the end of September 1998 due to an increase in loan production in September
1998.
Year 2000
The Bank utilizes and is dependent upon a third-party vendor for its
primary data processing functions. The Bank also utilizes other purchased
software packages which operate on in-house computer networks. In 1997, the Bank
developed a Year 2000 plan to assess, remedy and test the Bank's operations for
Year 2000 compliance. In addition, the Bank's Year 2000 plan includes assessing
the impact of the Year 2000 issue on borrowers' ability to repay. Through formal
communication, the Bank's primary data processing vendor and the majority of
other vendors have indicated their hardware and/or software is or will be Year
2000 compliant in 1999. The majority of the Bank's non-information technology
providers are not date sensitive. The Bank is developing contingency plans
related to non-information technology providers which are date sensitive and
provide services which are critical to the Bank's operations. The Bank has also
contacted all of its significant commercial loan customers to determine the
borrowers' ability and readiness to become Year 2000 compliant. Approximately
58% of the loan customers contacted have responded and the Bank has not
identified any significant issues with those customers. However, there can be no
guarantee that the systems of other companies on which the Bank's systems and
operations rely will be timely converted and would not have an adverse effect on
the Bank's operations.
Currently, the Bank is upgrading or replacing purchased software packages
and in-house computer network software and hardware, as needed, and testing
certain software for Year 2000 compliance. The Bank will utilize both internal
and external resources to upgrade, replace and test hardware, software and
third-party vendor programs. The Bank anticipates completing the Year 2000
project by October 31, 1999, which is prior to any anticipated impact on its
operating systems. As of September 30, 1998, the Bank has not incurred any
significant expenses other than personnel time. Costs to purchase computer
hardware and software are estimated to be approximately $2.0 million which will
be capitalized. The cost of the Year 2000 project will be funded through
operating cash flows. While management does not anticipate the cost of the Year
2000 project to have a material impact on the Company's financial condition,
operations or cash flows, the project is currently substantially incomplete in
the areas of testing the computer systems and assessing the impact of the Year
2000 issue on certain borrowers. The anticipated costs of the project and the
date on which the Company believes it will complete the Year 2000 project are
based on management's best estimates, which were derived utilizing numerous
assumptions of future events, including the continued availability of certain
resources, third-party modification plans and other factors. Therefore, no
guarantee can be made that these estimates will be achieved and actual results
could differ materially from those anticipated. Specific factors that might
cause such
15
<PAGE>
Management's Discussion and Analysis
of Financial Condition and Results of Operations (Continued)
- -------------------------------------------------------------------------------
material differences include, but are not limited to, the availability and cost
of personnel trained in this area, the ability to locate and correct all
relevant computer codes and similar uncertainties.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a financial institution holding company, the Company's primary component
of market risk is interest rate volatility. Fluctuations in interest rates will
ultimately impact both the level of income and expense recorded on a large
portion of the Bank's assets and liabilities and the market value of all
interest-earning assets, other than those with short term maturities. All of the
Company's interest rate risk exposure lies at the Bank level. Accordingly,
interest rate risk management procedures are performed at the Bank level. Based
on the nature of the Bank's operations, the Bank is not subject to foreign
currency exchange or commodity price risk. The Bank's real estate portfolio,
concentrated primarily within Palm Beach, Martin, Broward, Dade and Lee counties
of Florida, is subject to risks associated with the local economy.
The Company manages its interest rate risk exposure by limiting the amount
of long-term fixed rate loans it holds for investment, increasing emphasis on
shorter-term loans for portfolio, increasing or decreasing the relative amounts
of long-term and short-term borrowings and deposits and/or purchasing
commitments to sell loans. The following table presents the Company's exposure
to interest rate risk at September 30, 1998:
<TABLE>
<CAPTION>
September 30, 1998 2
-----------------------------------------------------------------------
One Year 1 to 3 3 to 5 Over 5
or Less Years Years Years Total
-------------- ------------- ------------- ------------- -------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Total interest-earning assets $517,205 $251,888 $94,545 $149,152 $1,012,790
Total interest-bearing liabilities 740,196 55,143 21,771 2,456 819,566
Interest rate sensitivity gap ($222,991) $196,745 $72,774 $146,696 $193,224
Cumulative interest rate sensitivity gap ($222,991) ($26,246) $46,528 $193,224
Cumulative interest rate sensitivity gap as a
percent of total assets (19.9)% (2.3)% 4.2% 17.3%
</TABLE>
- --------
2 In preparing the table above, certain assumptions have been made with
regard to loan prepayments and withdrawals of NOW, Money Market and savings
account deposits. Loan prepayment rates are based upon market consensus
estimates for similar securities. NOW, Money Market and savings account balances
are assumed to reprice immediately and are included in one year or less. All
other assets and liabilities have been repriced based on the earlier of
repricing or contractual maturity. The above assumptions are annual percentages
based on the latest available assumptions and on remaining balances and should
not be regarded as indicative of the actual prepayments and withdrawals that may
be experienced by the Company. Moreover, certain shortcomings are inherent in
the analysis presented by the foregoing table. For example, although certain
assets and liabilities may have similar maturities or periods for repricing,
they may react in different degrees to changes in market interest rates. Also,
interest rates on certain types of assets and liabilities may fluctuate in
advance of or lag behind changes in market interest rates. Additionally, certain
assets, such as ARM loans, have features that restrict changes in interest rates
on a short-term basis and over the life of the assets.
16
<PAGE>
PART II. OTHER INFORMATION
ITEM 1: Legal Proceedings
Neither the Company nor its subsidiaries are involved in any pending
legal proceedings, other than routine legal matters occurring in the ordinary
course of business which in the aggregate involve amounts which in management's
opinion are not material to the consolidated financial condition or results of
operation of the Company.
ITEM 2: Changes in Securities and Use of Proceeds
Not applicable.
ITEM 3: Defaults Upon Senior Securities
Not applicable.
ITEM 4: Submission of Matters to a Vote of Security Holders
A special meeting of shareholders of Republic Security Financial
Corporation was held on October 27, 1998. The following matters were voted upon:
1. Approval of the Agreement and Plan of Merger, dated as of May 27,
1998, as amended, (the "Merger Agreement") by and between RSFC and First Palm
Beach Bancorp, Inc. ("FPBB") providing for the merger of FPBB with and into
RSFC. The Merger Agreement provides for each common share of FPBB to be
converted into 4.194 shares of RSFC common stock and the transaction will be
accounted for as a pooling of interests.
2. Approval of an amendment to RSFC's Articles of Incorporation
increasing the authorized shares of its common stock, par value $0.01 per share
from 100,000,000 to 500,000,000, increasing the authorized shares of Series B
Junior Participating Preferred Stock from 1,000,000 to 5,000,000 and deleting
the 7% Cumulative Convertible Preferred Stock, Series C, therefrom.
3. Approval of an amendment to the Republic Security Financial
Corporation Performance Incentive Plan (the "Plan") increasing the number of
shares of RSFC Common Stock issuable under the Plan from 2,000,000 shares to
5,000,000 shares. The increase in shares in the Plan is needed due to an 80%
increase in the number of officers and employees as a result of the FPBB merger.
The results of the votes for each of the above three matters is as
follows:
Votes Cast: Broker
Matter For Against Withheld Abstain Non-vote
1 14,402,217 169,252 543,981
2 13,301,593 1,208,934 604,920
3 12,804,661 1,785,866 524,920
ITEM 5: Other Information
Not applicable.
17
<PAGE>
ITEM 6: Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report:
27 Financial Data Schedule (for SEC use only).
(b) During the three months ended September 30, 1998 the
Company filed one report on Form 8-K:
(i) Form 8-K filed on July 10, 1998 reported the
acquisition of Unifirst Federal Savings Bank in
a stock for stock transaction.
18
<PAGE>
REPUBLIC SECURITY FINANCIAL CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Republic Security Financial Corporation
(Registrant)
Date: November 13, 1998 /s/ Richard J. Haskins
----------------------------------------
Richard J. Haskins
Executive Vice President & CFO
(Principal Financial Officer)
Date: November 13, 1998 /s/ Carla H. Pollard
----------------------------------------
Carla H. Pollard
Vice President/Controller
(Duly Authorized Officer)
19
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998 DEC-31-1997 DEC-31-1997
<PERIOD-START> JUL-01-1998 JAN-01-1998 JUL-01-1997 JAN-01-1997
<PERIOD-END> SEP-30-1998 SEP-30-1998 SEP-30-1997 SEP-30-1997
<CASH> 28,572 28,572 60,867 60,867
<INT-BEARING-DEPOSITS> 56,256 56,256 75,473 75,473
<FED-FUNDS-SOLD> 0 0 7,665 7,665
<TRADING-ASSETS> 0 0 0 0
<INVESTMENTS-HELD-FOR-SALE> 149,573 149,573 129,748 129,748
<INVESTMENTS-CARRYING> 11,624 11,624 10,277 10,277
<INVESTMENTS-MARKET> 11,688 11,688 10,305 10,305
<LOANS> 806,418 806,418 750,140 750,140
<ALLOWANCE> 7,786 7,786 7,050 7,050
<TOTAL-ASSETS> 1,120,316 1,120,316 1,091,236 1,091,236
<DEPOSITS> 902,035 902,035 870,002 870,002
<SHORT-TERM> 0 0 63,397 63,397
<LIABILITIES-OTHER> 41,769 41,769 38,655 38,655
<LONG-TERM> 76,979 76,979 25,000 25,000
0 0 0 0
0 0 10,286 10,286
<COMMON> 71,795 71,795 60,470 60,470
<OTHER-SE> 27,737 27,737 23,426 23,426
<TOTAL-LIABILITIES-AND-EQUITY> 1,120,316 1,120,316 1,091,236 1,091,236
<INTEREST-LOAN> 17,140 51,890 16,064 47,060
<INTEREST-INVEST> 3,170 8,476 3,279 9,463
<INTEREST-OTHER> 0 0 0 0
<INTEREST-TOTAL> 20,310 60,366 19,343 56,523
<INTEREST-DEPOSIT> 7,991 22,849 7,442 21,557
<INTEREST-EXPENSE> 9,199 26,226 8,121 23,529
<INTEREST-INCOME-NET> 11,111 34,140 11,222 32,994
<LOAN-LOSSES> 1,400 1,599 81 918
<SECURITIES-GAINS> 0 381 262 436
<EXPENSE-OTHER> 10,744 28,853 9,962 32,873
<INCOME-PRETAX> 1,955 12,663 4,056 7,159
<INCOME-PRE-EXTRAORDINARY> 1,955 12,663 4,056 7,159
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 1,232 8,013 2,991 5,797
<EPS-PRIMARY> 0.05 0.32 0.12 0.22
<EPS-DILUTED> 0.05 0.31 0.11 0.22
<YIELD-ACTUAL> 4.43 4.67 4.91 4.90
<LOANS-NON> 6,230 6,230 8,063 8,063
<LOANS-PAST> 0 0 0 0
<LOANS-TROUBLED> 0 0 0 0
<LOANS-PROBLEM> 0 0 0 0
<ALLOWANCE-OPEN> 6,616 7,050 7,503 7,660
<CHARGE-OFFS> 335 1,362 989 798
<RECOVERIES> 105 499 55 566
<ALLOWANCE-CLOSE> 7,786 7,786 6,650 6,650
<ALLOWANCE-DOMESTIC> 7,786 7,786 6,650 6,650
<ALLOWANCE-FOREIGN> 0 0 0 0
<ALLOWANCE-UNALLOCATED> 1,625 1,625 1,208 1,208
</TABLE>
