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 quarterly period ended September 30, 2000
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
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(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
450 South Australian Avenue, West Palm Beach, FL 33401
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (561) 655-8511
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes _X_ No___
APPLICABLE ONLY TO CORPORATE ISSUERS:
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 October 30, 2000
----- ----------------------------------
Common Stock 48,614,060
Par value $.01 per share
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REPUBLIC SECURITY FINANCIAL CORPORATION AND SUBSIDIARIES
INDEX
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Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
for Forward-Looking Information.............................................................................. 1
PART I: FINANCIAL INFORMATION
Item 1: Financial Statements:
Condensed Consolidated Statements of Financial Condition
as of September 30, 2000, unaudited and December 31, 1999...................................... 2
Condensed Consolidated Statements of Income, unaudited for the
three months ended September 30, 2000 and 1999................................................. 3
Condensed Consolidated Statements of Income, unaudited for the
nine months ended September 2000 and 1999...................................................... 4
Condensed Consolidated Statements of Comprehensive Income, unaudited for the
three and nine months ended September 30, 2000 and 1999........................................ 5
Condensed Consolidated Statements of Shareholders' Equity for the
nine months ended September 30, 2000, unaudited and the year ended December 31, 1999........... 6
Condensed Consolidated Statements of Cash Flows, unaudited for the
nine months ended September 30, 2000 and 1999.................................................. 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 Disclosures about Market Risk..................................... 16
PART II: OTHER INFORMATION:
Item 1: Legal Proceedings.............................................................................. 18
Item 2: Changes in Securities and Use of Proceeds...................................................... 18
Item 3: Defaults Upon Senior Securities................................................................ 18
Item 4: Submission of Matters to a Vote of Security Holders............................................ 18
Item 5: Other Information.............................................................................. 18
Item 6: Exhibits and Reports on Form 8-K............................................................... 18
Signatures..................................................................................... 19
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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 the Company, the Bank
and the Bank's wholly-owned subsidiaries, Spectrum Financial Corporation, RSAM
Holdings, Inc., RS Maritime Corporation (d/b/a First New England Financial) and
Republic Security Insurance Agency 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.
The following important factors could cause actual results or outcomes
to differ materially from those expressed in any forward-looking statements of
the Company. All forward-looking statements speak only as of the date on which
such statements are made, and the Company does not undertake any obligation to
update any forward-looking statement or statements to reflect events or
circumstances after the date on which such statement is made or to reflect the
occurrence of anticipated events. New factors emerge from time to time and it is
not possible for management to predict all of such factors, nor can it assess
the impact of each such factor on the business or the extent to which any
factor, or combination of factors, may cause actual results to differ materially
from those contained in any forward-looking statements. The most significant
factors that could cause the assumptions underlying the forward-looking
statements and the actual results of the Company to differ materially from those
expressed in or implied by those forward-looking statements include, but are not
limited to the following:
o adverse general economic conditions and/or adverse economic conditions
in the counties in which our banking centers are located;
o intense competition for depositors and borrowers from financial
institutions with much greater resources than the Bank;
o fiscal and monetary policies of the U.S. government;
o changes in interest rates and
o adverse changes in laws and regulations
These and other risks and uncertainties affecting the Company, all of
which are difficult to predict and many of which are beyond the control of the
Company, are discussed in greater detail in this report and in other filings by
the Company with the Securities and Exchange Commission. Accordingly, all
forward-looking 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,
the Bank or any subsidiaries of either of them.
1
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PART I - FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
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REPUBLIC SECURITY FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
===============================================================================================================
September 30, December 31,
(amounts in thousands except share and per share data) 2000 1999
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<S> <C> <C>
Assets (unaudited)
Cash and amounts due from depository institutions $ 40,858 $ 73,054
Interest-bearing deposits in other financial institutions 91,723 41,201
Federal funds sold -- 3,595
---------------------------------------------------------------------------------------------------------------
Cash and cash equivalents 132,581 117,850
Investments available-for-sale 836,653 792,125
Investments held to maturity (Market value of $133,180 and $139,383 at
September 30, 2000 and December 31, 1999, respectively) 138,602 147,275
Loans receivable - net 2,006,048 1,822,433
Loans held for sale (Market value of $45,300 and $62,000 at
September 30, 2000 and December 31, 1999, respectively) 45,300 62,000
Property and equipment - net 64,231 65,349
Other real estate owned - net 986 2,004
Federal Home Loan Bank Stock and FRB Stock 29,284 34,821
Goodwill - net 20,101 17,715
Bank owned life insurance 55,157 58,039
Deferred taxes - net 14,629 16,564
Accrued interest receivable 19,746 16,986
Other assets 33,662 39,051
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Total assets $ 3,396,980 $ 3,192,212
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Liabilities and Shareholders' Equity
Liabilities:
Deposits $ 2,013,253 $ 2,064,936
Federal Home Loan Bank advances and other borrowings 487,879 618,996
Securities sold under agreements to repurchase 608,839 248,521
Senior debentures, net of unamortized issuance costs 20,534 20,531
Advances from borrowers for taxes and insurance 17,895 5,908
Bank drafts payable 15,581 11,208
Other liabilities 26,118 21,450
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Total liabilities 3,190,099 2,991,550
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Commitments and contingencies shareholders' equity:
Common stock $.01 par value; 500,000,000 shares authorized;
50,918,804 and 50,748,419 issued shares; outstanding 48,579,304 and
49,696,419 (net of treasury stock) at September 30, 2000 and
December 31, 1999, respectively 509 508
Treasury stock (2,339,500 and 1,052,000 shares repurchased at September 30,
2000 and December 31, 1999, respectively) (23) (11)
Additional paid-in capital 116,742 124,931
Retained earnings 103,754 94,934
Accumulated other comprehensive loss, net of taxes (14,101) (19,700)
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Total shareholders' equity 206,881 200,662
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Total liabilities and shareholders' equity $ 3,396,980 $ 3,192,212
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See notes to condensed consolidated financial statements
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2
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REPUBLIC SECURITY FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
===============================================================================================================
Three Months Ended
September 30,
--------------------------------------------
(amounts in thousands except per share data) 2000 1999
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<S> <C> <C>
Interest Income: (unaudited) (unaudited)
Interest and fees on loans $ 42,386 $ 38,167
Interest and dividends on investments 17,607 13,704
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59,993 51,871
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Interest Expense:
Interest on deposits 19,888 19,560
Interest on borrowings 18,604 7,852
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38,492 27,412
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Net interest income 21,501 24,459
Provision for loan losses 700 300
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Net interest income after provision for loan losses 20,801 24,159
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Non-Interest Income:
Service charges on deposit accounts 3,662 3,293
Net gain on sales of loans 1,343 2,046
Net (loss) gain on sales of investments available-for-sale (5) 789
Net gain on real estate transactions 1,013 --
Other income 4,280 2,131
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10,293 8,259
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Operating Expenses:
Employee compensation and benefits 10,769 9,548
Occupancy and equipment 5,167 4,912
Professional fees 674 325
Advertising and promotion 242 397
Communications 1,066 558
Insurance 398 418
Data processing 1,683 971
Other 3,853 2,767
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23,852 19,896
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Income before income taxes 7,242 12,522
Income tax expense 2,527 4,487
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Net income and income applicable to common stock $ 4,715 $ 8,035
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Per share data:
Basic earnings $ 0.10 $ 0.16
Diluted earnings $ 0.10 $ 0.16
Dividends $ 0.06 $ 0.06
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Weighted average common shares and common stock equivalents outstanding:
Basic 48,579 50,632
Diluted 48,888 51,201
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See notes to condensed consolidated financial statements
===============================================================================================================
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3
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REPUBLIC SECURITY FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
============================================================================================================
Nine Months Ended
September 30,
-----------------------------------------
(amounts in thousands except per share data) 2000 1999
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<S> <C> <C>
Interest Income: (unaudited) (unaudited)
Interest and fees on loans $ 121,544 $ 117,680
Interest and dividends on investments 52,026 39,273
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173,570 156,953
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Interest Expense:
Interest on deposits 57,044 62,873
Interest on borrowings 48,613 20,251
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105,657 83,124
------------------------------------------------------------------------------------------------------------
Net interest income 67,913 73,829
Provision for loan losses 2,700 1,100
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Net interest income after provision for loan losses 65,213 72,729
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Non-Interest Income:
Service charges on deposit accounts 10,238 9,258
Net gain on sales of loans 2,872 4,361
Net gain on sales of investments available-for-sale 368 966
Net gain on real estate transactions 3,367 1,122
Other income 10,688 5,650
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27,533 21,357
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Operating Expenses:
Employee compensation and benefits 29,931 27,513
Occupancy and equipment 14,799 14,198
Professional fees 1,513 1,244
Advertising and promotion 764 1,053
Communications 2,910 1,834
Insurance 1,201 1,338
Data processing 4,307 2,488
Other 10,563 7,571
Merger expenses -- 2,381
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65,988 59,620
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Income before income taxes 26,758 34,466
Income tax expense 9,185 12,425
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Net income and income applicable to common stock $ 17,573 $ 22,041
------------------------------------------------------------------------------------------------------------
Per share data:
Basic earnings $ 0.36 $ 0.44
Diluted earnings $ 0.36 $ 0.43
Dividends $ 0.18 $ 0.18
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Weighted average common shares and common stock equivalents outstanding:
Basic 48,677 50,564
Diluted 49,063 51,191
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See notes to condensed consolidated financial statements
============================================================================================================
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4
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REPUBLIC SECURITY FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
============================================================================================================
Three Months Ended
September 30,
-----------------------------------------
(amounts in thousands) 2000 1999
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<S> <C> <C>
Interest Income: (unaudited) (unaudited)
Net income $ 4,715 $ 8,035
Other comprehensive income, net of tax:
Unrealized gain (loss) on investments available-for-sale arising during
the period, net of taxes of $2,493 and ($1,116) in 2000 and 1999,
respectively. 4,242 (1,404)
Reclassification adjustment for amounts realized on sale of investments
included in net income, net of taxes of $2 and ($292) in 2000 and 1999, 3 (497)
respectively.
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Comprehensive income $ 8,960 $ 6,134
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Nine Months Ended
September 30,
-----------------------------------------
(amounts in thousands) 2000 1999
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<S> <C> <C>
Interest Income: (unaudited) (unaudited)
Net income $ 17,573 $ 22,041
Other comprehensive income, net of tax:
Unrealized gain (loss) on investments available-for-sale arising during
the period, net of taxes of $3,288 and ($7,664) in 2000 and 1999,
respectively. 5,831 (12,441)
Reclassification adjustment for amounts realized on sale of investments
included in net income, net of taxes of ($136) and ($357) in 2000 and
1999, respectively. (232) (609)
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Comprehensive income $ 23,172 $ 8,991
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See notes to condensed consolidated financial statements
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5
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REPUBLIC SECURITY FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
========================================================================================================================
Accumulated
Additional Comprehensive
Common Paid-in Retained Income (Loss),
(amounts in thousands except share data) Stock Capital Earnings Net of Taxes
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<S> <C> <C> <C> <C>
Balance December 31, 1998 $ 497 $ 128,044 $ 77,732 $ 1,705
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Exercise of stock options - 1,071,290 shares 11 5,613
Purchase of treasury stock - 1,052,000 shares (11) (8,726)
Cash dividends (11,978)
Cash dividends paid by pooled company (289)
Net income 29,469
Changes in accumulated other comprehensive
income (loss), net of taxes (21,405)
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Balance December 31, 1999 497 124,931 94,934 (19,700)
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Purchase of treasury stock - 1,287,500 shares (13) (9,237)
Issuance of stock for the purchase of NHI - 2 1,048
170,385 shares
Cash dividends (8,753)
Net income 17,573
Changes in accumulated other comprehensive
income (loss), net of taxes 5,599
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Balance September 30, 2000 (unaudited) $ 486 $ 116,742 $ 103,754 $ (14,101)
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See notes to condensed consolidated financial statements
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6
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REPUBLIC SECURITY FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
======================================================================================================================
Nine Months Ended
September 30,
----------------------------------------
(amounts in thousands) 2000 1999
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<S> <C> <C>
Operating Activities: (unaudited) (unaudited)
Net income $ 17,573 $ 22,041
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses 2,700 1,100
Depreciation and amortization 7,497 6,439
Amortization of deferred loan fees and costs 407 440
Net gain on sales of loans (2,872) (4,361)
Proceeds from loan sales, net 38,727 149,970
Net gain on sales of investments available-for-sale (368) (966)
Other - net 20,056 (218)
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Net cash provided by operating activities 83,720 174,445
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Investing Activities:
Cash and cash equivalents acquired in branch purchase -- 24,694
Cash paid for acquired subsidiaries (8,550) (6,814)
Purchase of investments available-for-sale (188,815) (234,584)
Purchase of investments held to maturity -- (147,999)
Proceeds from sales of investments available-for-sale 95,296 189,538
Principal payments on securities 67,729 109,858
Loans purchased for investment (175,609) (167,478)
Net (increase) decrease in loans (34,407) 164,925
Net sales (purchases) of property and equipment 1,751 (16,277)
Other - net 14,101 (494)
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Net cash used in investing activities (228,504) (84,631)
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Financing Activities:
Net decrease in demand deposits, NOW accounts, Money Market accounts and
savings accounts (23,743) (22,312)
Net decrease in time deposits (27,940) (242,556)
Purchase of treasury stock, at cost (9,250) --
(Decrease) increase in FHLB advances and other borrowings (131,117) 105,250
Purchase of senior debentures -- (4,612)
Net increase in securities sold under agreements to repurchase 360,318 99,021
Cash dividends (8,753) (9,244)
Other - net -- 5,190
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Net cash provided by (used in) financing activities 159,515 (69,263)
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Increase in cash and cash equivalents 14,731 20,551
Cash and cash equivalents at beginning of period 117,850 181,141
----------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 132,581 $ 201,692
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Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes $ 7,150 $ 9,675
Cash paid for interest on deposits and other borrowings $ 103,668 $ 82,329
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See notes to condensed consolidated financial statements
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7
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REPUBLIC SECURITY FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements include the accounts of Republic Security Financial
Corporation ("Republic") and its wholly-owned subsidiary, Republic
Security Bank ("the Bank"), as well as the Bank's wholly owned
subsidiaries, RS Maritime Corporation d/b/a First New England Financial
("FNEF"), Spectrum Financial Corporation ("Spectrum"), Republic
Security Insurance Agency ("RSIA"), and RSAM Holdings, Inc.
(collectively, the "Company"). All significant intercompany balances
and transactions have been eliminated in consolidation. 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 financial position of the Company as of
September 30, 2000 and December 31, 1999, and the results of its
operations and comprehensive income for the three and nine months ended
September 30, 2000 and 1999 and its cash flows for the nine months then
ended.
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 three and nine months
ended September 30, 2000 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2000. For further
information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form 10-K
for the year ended December 31, 1999.
The statement of financial condition at December 31, 1999 has
been derived from the audited financial statements at that date but
does not include all of the information required by generally accepted
accounting principles for complete financial statements.
In addition to the accounts and results of operations of the
Company, the condensed consolidated financial statements also include
the accounts and results of operations of National Horizon, Inc.,
("NHI") since Republic acquired the stock of this company and merged it
into the FNEF subsidiary on April 28, 2000 and the accounts and results
of operations of Spectrum since the Bank acquired the net assets of
this specialized financial services company on May 5, 2000.
2. Non-Performing Assets and Allowance for Loan Losses
At September 30, 2000, the Bank had $10.2 million in
non-performing assets (loans 90 days or more past due, other real
estate owned and repossessed assets) compared to $18.4 million at
December 31, 1999. The provision for loan losses was $0.7 million and
$0.3 million for the three months ended September 30, 2000 and 1999,
respectively.
Although management uses its best judgment 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
8
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REPUBLIC SECURITY FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
collateral securing such loans. Accordingly, management has established
an allowance for loan losses which totaled $22.8 million and $22.3
million at September 30, 2000 and December 31, 1999, respectively.
The allowance for loan losses is maintained at a level
believed adequate by management to absorb estimated probable loan
losses inherent in the loan portfolio. 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.
An analysis of changes in the allowance for loan losses is
summarized as follows:
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Nine Months Ended
September 30,
(in thousands) 2000
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<S> <C>
Beginning balance $ 22,301
Reserves acquired in connection with purchase of loans 1,929
Provision for losses 2,700
Recoveries 1,031
Charge-offs (5,210)
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Ending balance $ 22,751
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3. Off-Balance Sheet Financial Agreements and Commitments
The Bank entered into an interest rate cap agreement on June
1, 2000. This financial agreement, frequently called an interest rate
derivative, is used to help manage the Bank's exposure to changes in
interest rates. The interest rate cap is used as a means of mitigating
the effects of further interest margin compression should there be
further increases in market interest rates. The notional amount of the
cap at September 30, 2000 was $250.0 million. The adoption of SFAS No.
133 "Accounting for Derivative Instruments and Hedging Activities" in
fiscal 2001, which requires derivative instruments to be carried at
their fair value on the balance sheet, is not expected to have a
material impact on the financial condition, operations or cash flows of
the Company.
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 creditworthiness on a case by case
basis. The amount of collateral obtained, if deemed necessary by the
Bank, upon an extension of credit is based on management's credit
evaluation of the counter party.
At September 30, 2000, the Bank had adjustable rate
commitments to extend credit of approximately $312.4 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.
9
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REPUBLIC SECURITY FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4. Contingent Liabilities
There are certain contingencies involving various matters of
litigation pending against the Company that management has reviewed
with legal counsel. In the opinion of management, amounts accrued for
awards or assessments in connection with these matters are adequate and
the ultimate resolution of these matters is not expected to have a
material effect on the Company's consolidated financial position,
results of operations or cash flows.
5. Earnings per Common Share
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
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Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ------------------
(amounts in thousands except per share data) 2000 1999 2000 1999
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Numerator: (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Net income - numerator for basic and diluted
earnings per share $ 4,715 $ 8,035 $ 17,573 $ 22,041
=======================================================================================================
Denominator:
Denominator for basic earnings per share - weighted
average shares 48,579 50,632 48,677 50,564
Effect of dilutive securities - employee stock options 309 569 386 627
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Denominator for diluted earnings per share 48,888 51,201 49,063 51,191
=======================================================================================================
Basic earnings per share $ 0.10 $ 0.16 $ 0.36 $ 0.44
Diluted earnings per share $ 0.10 $ 0.16 $ 0.36 $ 0.43
=======================================================================================================
</TABLE>
At September 30, 2000, 2,645,850 stock options at a weighted
average exercise price of $8.55 were outstanding that could potentially
dilute earnings per share in future periods, but which were not
included in the computation of diluted earnings per share for the three
months ended September 30, 2000. The effect of these shares is
antidilutive to diluted earnings per share for the three months ended
September 30, 2000. At September 30, 2000, 2,442,636 stock options at a
weighted average exercise price of $8.84 were outstanding that could
potentially dilute earnings per share in future periods, but which were
not included in the computation of diluted earnings per share for the
nine months ended September 30, 2000. The effect of these shares is
antidilutive to diluted earnings per share for the nine months ended
September 30, 2000.
During the fourth quarter of fiscal 1999, the Company's Board
of Directors authorized a common stock repurchase program of up to 2.0
million shares or approximately 4% of the Company's shares outstanding
at that time. On March 22, 2000, the Company's Board of Directors
approved the repurchase of up to an additional 2.0 million shares or
approximately 4% of the Company's outstanding shares under the program.
The company repurchases the shares at its discretion in the open market
and/or through privately negotiated transactions. During the fourth
quarter of 1999 and through June 30, 2000, the Company repurchased an
aggregate of 2.3 million of its shares under this program. Pursuant to
the agreement entered into with Wachovia Corporation (see Note 6) the
Company has agreed not to repurchase any of its shares.
10
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REPUBLIC SECURITY FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6. Subsequent Events
On October 29, 2000, RSFC signed a definitive agreement to be
acquired by Wachovia Corporation ("Wachovia"). The total purchase price
will be $344.0 million in Wachovia common shares. The agreement
provides for a tax-free exchange of Wachovia common shares for RSFC
common shares with a minimum exchange ratio of .1245 and a maximum of
.1521 Wachovia common shares for each RSFC share, resulting in a
current valuation of $7.00 for each RSFC share. Reference is made to
the Company's filing on Form 8-K, filed on November 8, 2000, with
reference to the merger with Wachovia. The transaction is subject to
regulatory and shareholder approvals and is expected to close in the
first quarter of 2001.
On October 10, 2000, the Bank executed a definitive agreement
with TIB Financial Corporation to sell the loans, deposits, real estate
and other fixed assets associated with two branches located in
Homestead, Florida. The transaction is subject to regulatory approval
and is expected to be completed by year end.
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, 2000 and 1999
Results of Operations
The Company's net income for the three months ended September
30, 2000 was $4.7 million or $0.10 basic and diluted earnings per
common share, compared to $8.0 million or $0.16 basic and diluted
earnings per common share for the three months ended September 30,
1999. Net interest income decreased $3.0 million for the three months
ended September 30, 2000 compared to the three months ended September
30, 1999 primarily due to an increase in the cost of interest-bearing
liabilities. Non-interest income increased $2.0 million or 25%, while
operating expenses increased $4.0 million or 20% for the three months
ended September 30, 2000 compared to the three months ended September
30, 1999. The Company's net income for the nine months ended September
30, 2000 was $17.6 million or $0.36 basic and diluted earnings per
common share, compared to $22.0 million or $0.44 basic earnings per
common share and $0.43 diluted earnings per common share for the nine
months ended September 30, 1999. Net interest income decreased $5.9
million for the nine months ended September 30, 2000 compared to the
nine months ended September 30, 1999 due to an increase in the cost of
interest-bearing liabilities. Non-interest income increased $6.2
million or 29% while operating expenses (excluding merger expenses)
increased $8.7 million or 15% for the nine months ended September 30,
2000 compared to the nine months ended September 30, 1999.
Net Interest Income
The $3.0 million decrease in net interest income for the three
months ended September 30, 2000 compared to the three months ended
September 30, 1999 is due to an increase of $11.1 million in interest
expense offset by an increase of $8.1 million in interest income.
Approximately $5.2 million of the increase in interest income is
attributable to an increase of $280.8 million in interest-earning
assets and approximately $2.9 million of the increase is due to a 38
basis points increase in yield on interest-earning assets. The average
outstanding principal balance of loans increased $111.5 million and
average investments increased $171.8 million during the three months
ended September 30, 2000 compared to the three months ended September
30, 1999, which was offset in part by a $2.5 million reduction in the
average outstanding interest-earning cash balance during the three
months ended September 30, 2000 compared to the three months ended
September 30, 1999.
The $11.1 million increase in interest expense for the three
months ended September 30, 2000 compared to the three months ended
September 30, 1999 is comprised of approximately $4.2 million
attributable to an increase of $372.4 million in interest-bearing
liabilities and approximately $6.9 million due to an increase of 99
basis points in the cost of interest-bearing liabilities. The increase
in the cost of interest-bearing liabilities is due to the effect of
increases in market interest rates totaling 125 basis points since
September 1999. Net interest margin decreased 71 basis points to 2.80%
for the three months ended September 30, 2000 compared to 3.51% for the
three months ended September 30, 1999. Net interest spread decreased 65
basis points to 2.27% for the three months ended September 30, 2000
compared to 2.92% for the three months ended September 30, 1999. The
decrease in net interest margin is primarily due to the increased cost
of funds attributable to the effect of increases in market interest
rates and the purchase of approximately $50.0 million of bank-owned
life insurance which generates fee income rather than interest income.
Management expects further margin compression throughout the year 2000
due to the increases in interest rates by the Federal Reserve made in
the first and second quarters of 2000. Future Federal Reserve interest
rate hikes throughout the remainder of the year would also increase
margin compression.
The $5.9 million decrease in net interest income for the nine
months ended September 30, 2000 compared to the nine months ended
September 30, 1999 is due to an increase of $22.5 million in interest
expense offset by an increase of $16.6 million in interest income.
Approximately $11.0 million of the increase in interest income is
attributable to an increase of $197.3 million in interest-earning
assets and approximately $5.6 million of the increase is due to an
increase of 25 basis points in yield on interest-earning assets. The
$22.5 million increase in interest expense for the nine months ended
September 30, 2000 is comprised of approximately $10.0 million
attributable to an increase of $291.7 million in interest-bearing
liabilities and approximately $12.5 million attributable to an increase
of 62 basis points in the cost of interest-bearing liabilities.
12
<PAGE>
Provision for Loan Losses
The provision for loan losses increased $0.4 million for the
three months ended September 30, 2000 compared to the three months
ended September 30, 1999. The increase in the provision was due to loan
growth and management's assessment of the characteristics of the Bank's
loan portfolio.
Non-Interest Income
Non-interest income increased $2.0 million for the three
months ended September 30, 2000 compared to the three months ended
September 30, 1999. The increase is due to a $2.1 million increase in
other income, attributable primarily to $0.9 million earned on the
Bank's bank-owned life insurance and $1.2 million generated by the
acquired subsidiaries, FNEF, NHI and Spectrum. Also contributing to the
increase in non-interest income were increases in service charges on
deposit accounts of $0.4 million, primarily due to an increased volume
in transaction accounts and an increase in the usage of products
subject to service charges, as well as the results of the Bank's
establishment of a cash management department in 1999 to enhance and
sell cash management services to business customers. These increases
were offset by a net decrease in gains on the sale of loans,
investments and real estate of $0.5 million.
Non-interest income increased $6.2 million for the nine months
ended September 30, 2000 compared to the nine months ended September
30, 1999. The increase is due to a $5.0 million increase in other
income, attributable primarily to $2.4 million earned on the Bank's
bank-owned life insurance, $0.4 million additional gain on the First
Palm Beach Bancorp's pension plan which was terminated in 1999 and
approximately $1.9 million generated from the acquired subsidiaries,
FNEF, NHI and Spectrum. Also contributing to the increase in
non-interest income were increases in service charges on deposit
accounts of $1.1 million, primarily due to an increased volume in
transaction accounts and an increase in the usage of products subject
to service charges.
Operating Expenses
Total operating expenses increased $4.0 million for the three
months ended September 30, 2000 compared to the three months ended
September 30, 1999. The increase in operating expenses is primarily due
to increases in employee compensation and benefits, communication, data
processing and other expenses, which increased $1.2 million, $0.5
million, $0.7 million and $1.1 million, respectively. Approximately
$0.4 million of the increase in employee compensation and benefits is
attributable to average annual salary increases of 4% and approximately
$0.8 million of the increase is attributable to the acquired
subsidiaries, FNEF, NHI and Spectrum. Costs associated with
communication and data processing expenses increased as a direct result
of adding the operations of acquired businesses and the Bank's overall
growth. Other operating expenses increased $1.1 million, which relates
primarily to director retirement plans, outside services, courier
expenses, correspondent bank charges and printing and supplies
expenses. These increases are a direct result of the Bank's overall
growth, along with ordinary cost increases. The growth of the Bank's
operations included adding new trust services offices and new business
banking locations. The remaining $0.4 million of the increase is
directly related to the acquisitions of the FNEF marine loan operation,
NHI and the Spectrum financial services company.
Total operating expenses (excluding merger related expenses of
$2.4 million incurred in March, 1999), increased $8.7 million for the
nine months ended September 30, 2000 compared to the nine months ended
September 30, 1999. The increase in operating expenses is primarily due
to increases in employee compensation and benefits, communication, data
processing and other expenses, which increased $2.4 million, $1.1
million, $1.8 million and $3.0 million, respectively. The increase in
employee compensation and benefits is attributable, in part, to average
annual salary increases of 4% and approximately $1.7 million of the
increase is attributable to the acquired subsidiaries, FNEF, NHI and
Spectrum. Costs associated with communication and data processing
expenses increased as a direct result of adding the operations of
acquired businesses and the Bank's overall growth. Also, approximately
$0.9 million of the increase in data processing expenses for the nine
months ended September 30, 2000 compared to the nine months ended
September 30, 1999 is a direct result of the conversion of FPBB's in
house data processing system to the Bank's outside data service bureau
in late April of 1999. Other operating expenses also increased due
primarily to the Bank's overall growth and franchise expansion, along
with ordinary cost increases, which resulted in a $0.2 million increase
in director retirement plans expense, a $0.2 million increase in
outside services expense, a $0.3 million increase in courier expenses,
a $0.3 million increase in printing and supplies
13
<PAGE>
expense and a $0.3 million increase in other operating expenses. The
remaining $1.1 million of the increase is directly related to the
acquisitions of the FNEF marine loan operation, NHI and the Spectrum
financial services company.
Provision for Income Taxes
Income tax expense decreased $2.0 million for the three months
ended September 30, 2000 compared to the three months ended September
30, 1999 due to a decrease in income before income taxes of $5.3
million. The provision for income taxes decreased $3.2 million for the
nine months ended September 30, 2000 compared to the nine months ended
September 30, 1999 due to a decrease in income before income taxes of
$7.7 million, offset by a reduction in the effective tax rate. The
decrease in the effective tax rate is due primarily to certain tax
planning strategies that have been implemented by the Bank. In July
1999, the Bank established an indirect subsidiary to hold certain
assets in a real estate investment trust ("REIT"). The REIT was
established to hold certain loan portfolios transferred from the Bank,
currently comprised primarily of commercial loans secured by real
estate. Interest earnings of the REIT are not subject to certain state
income taxes.
Loan Portfolio
The following table sets forth the composition of the Bank's
loan portfolio by type (excluding loans held for sale) at the periods
indicated:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
September 30, 2000 December 31, 1999
------------------------ ---------------------
(amounts in thousands) Amount Percent Amount Percent
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Type of Loan:
Commercial real estate $ 419,609 21% $ 400,168 22%
Residential property 878,615 43 856,443 46
Construction 68,983 3 73,264 4
Consumer 278,966 14 250,088 14
Yacht 179,215 9 138,928 7
Commercial business 198,242 10 122,695 7
------------------------------------------------------------------------------------------------------------
Total Loans 2,023,630 100% 1,841,586 100%
------------------------------------------------------------------------------------------------------------
Less:
Discounts, premiums and deferred loan fees (5,169) (3,148)
Allowance for loan losses 22,751 22,301
------------------------------------------------------------------------------------------------------------
Total $ 2,006,048 $ 1,822,433
============================================================================================================
</TABLE>
Liquidity, Sources of Capital and Capital Requirements
The Bank is subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum
capital requirements can initiate certain mandatory and possible
additional discretionary action by regulators that, if undertaken,
could have a direct material effect on the Bank's financial statements.
Under capital adequacy guidelines and the regulatory framework for
prompt corrective action, the Bank must meet specific capital
guidelines that involve quantitative measures of the Bank's assets,
liabilities and certain off-balance-sheet items as calculated under
regulatory accounting practices. The Bank's capital amounts and
classification are also subject to judgements by the regulators about
components, risk weighting, and other factors.
14
<PAGE>
Quantitative measures established by regulation to ensure
capital adequacy require Republic and the Bank to maintain minimum
amounts and ratios of total and Tier 1 capital (as defined in the
regulations) to risk-weighted assets (as defined), and of Tier 1
capital (as defined) to average assets (as defined).
The following table shows the capital amounts and ratios of
the Bank at September 30, 2000:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
(dollars in thousands) Amount Ratio
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Total risk based capital $ 225,946 11.98%
Tier 1 risk based capital $ 202,816 10.75%
Leverage capital $ 202,816 6.10%
============================================================================================================
</TABLE>
The most recent notification from the Federal Reserve Bank
categorized the Bank as "well capitalized" under the regulatory
framework for prompt corrective action. At September 30, 2000, the Bank
exceeded each of the regulatory capital requirements and was considered
a "well capitalized" institution for regulatory purposes.
To the extent that the demand for loan funds exceeds cash
available from deposits, the Bank may borrow funds from the Federal
Home Loan Bank of Atlanta, draw on lines of credit with commercial
banks, enter into repurchase agreements or acquire brokered deposits.
Cash and cash equivalents increased by approximately $14.7 million
during the nine months ended September 30, 2000. (See "Financial
Condition").
Financial Condition
Total assets increased approximately $204.8 million during the
nine months ended September 30, 2000 due primarily to increases of
$14.7 million in cash and cash equivalents, $166.9 million in total net
loans, $35.9 million in investments and $2.4 million in goodwill,
offset by decreases of $5.5 million in Federal Home Loan Bank ("FHLB")
stock, $2.9 million in bank-owned life insurance, $1.9 million in
deferred taxes, net and $5.4 million in other assets. The increase in
loans is primarily due to the purchase of $53.5 million in commercial
real estate loans, $77.5 million in residential mortgage loans and
$43.0 million in consumer loans, $369.8 million in loan production and
approximately $63.7 million in yacht loans originated by FNEF, offset
by $64.8 million in loan sales, with the remainder attributable to loan
paydowns and payoffs. The increase in investments was funded with
proceeds from leveraged borrowings under repurchase agreements, which
is consistent with the Bank's strategy to increase overall income
through growth opportunities. The increase in goodwill is the result of
the acquisitions of NHI and Spectrum. In addition, approximately $14.3
million in other assets were acquired with the acquisition of Spectrum,
which was offset by decreases in various miscellaneous receivables of
$19.7 million. The decrease in FHLB stock is attributable to a
reduction in the outstanding balance of the Bank's advances from the
FHLB. The FHLB requires member banks to invest in its stock based on
each bank's level of outstanding borrowings with the FHLB.
Total liabilities increased approximately $198.5 million due
primarily to an increase of $360.3 million in borrowings associated with
securities sold under agreements to repurchase ("repurchase
agreements"), a $12.0 million increase in advances from borrowers for
taxes and insurance, an increase of $4.4 million in bank drafts payable
and an increase of $4.7 million in other liabilities, offset by
decreases in total deposits and FHLB advances and other borrowings of
$51.7 million and $131.1 million, respectively. The Company increased
its borrowings under repurchase agreements and acquired $10.2 million in
brokered certificates of deposit to fund the reduction in outstanding
advances from the FHLB, the anticipated run-off of certificates of
deposit, which totaled $27.9 million during the nine months ended
September 30, 2000, and to fund lower yielding and non-interest bearing
deposit run-off of approximately $23.7 million since December 31, 1999.
In response to recent interest rate increases by the Federal Reserve and
competition in the Bank's market area, the Bank has increased its
deposit pricing; subsequent to the increase, the Bank has experienced a
significant decrease in certificate of deposit run-off. The increase in
repurchase agreements was also used to fund loan purchases, loan
production, investment purchases and asset acquisitions. In order to
manage the uncertainty inherent in its sources of funds, the Company
continues to evaluate alternative funding sources and maintains and
develops diversity and flexibility in the number and types of such
sources.
15
<PAGE>
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a bank holding company, Republic'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 financial instruments, 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 loan portfolio, concentrated primarily
within Palm Beach, Martin, Broward, Dade, Lee and Hillsborough counties
in Florida, is subject to risks associated with the local economy.
The Bank 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 and/or adjustable rate loans for
its portfolio, use of off-balance sheet financial agreements,
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 Bank's exposure to interest
rate risk at September, 2000:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
September 30, 2000/1/
------------------------------------------------------------------
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 $1,305,866 $846,145 $476,862 $486,810 $3,115,683
Total interest-bearing liabilities 2,179,917 413,020 27,441 172,995 2,793,373
---------- --------- --------- --------- ---------
Interest rate sensitivity gap ($874,051) $433,125 $449,421 $313,815 $322,310
========== ========= ========= ========= =========
Cumulative interest rate sensitivity gap ($874,051) ($440,926) $8,495 $322,310
========== ========== ====== ========
Cumulative interest rate sensitivity
gap as a percent of total assets ( 25.87)% (13.05)% 0.25% 9.54%
========== ========== ====== ========
=========================================================================================================
</TABLE>
/1/ In preparing the table above, assumptions have been made with regard to
loan prepayments and withdrawals of transaction account deposits. Loan
prepayment rates are based upon market consensus estimates for similar
securities. Money market, High yield checking and High yield savings
account balances are included in one year or less. Fifty percent of NOW
and regular savings account deposits are included in one year or less,
and the remaining fifty percent are included in the greater than five
year category. All other assets and liabilities have been repriced
based on the earlier of repricing or contractual maturity. The above
assumptions are 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 Bank.
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.
In addition to the above, the Bank was committed to fund
$312.4 million in new loans and $69.8 million in construction
loans-in-process at September 30, 2000. These loans and commitments are
largely protected from interest rate fluctuations because they are
either adjustable rate loans or are fixed rate loans which the Bank has
obtained commitments to sell in the secondary market. This relationship
is not linear or consistent with other interest rate sensitive assets
and liabilities on the Company's balance sheet and management uses
computer modeling to measure and reduce the effects that interest rate
fluctuations have on income.
At September 30, 2000, the Bank's one-year, cumulative
interest rate sensitivity gap as a percentage of total assets was
(25.9)%, which reflects a slight increase from (22.2)% at December 31,
1999.
16
<PAGE>
The current potential changes in future earning relating to
financial assets and liabilities as of September 30, 2000 are as
follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
Potential Change in Future Earnings
Year 1
-----------------------------------------------------------------------------------------------------------
<S> <C>
Interest Rate Change in Basis Points:
+ 100 (6.30)%
- 100 4.96%
===========================================================================================================
</TABLE>
The most significant assumptions used in this simulation concern the
repricing rates of demand and other non-maturity deposits and loan
prepayment rates. In both an increasing and decreasing rate
environment, money market accounts are assumed to have the following
lag characteristics: the Bank will recognize 25 percent of the rate
change at six months. High yield savings and checking accounts will
recognize 100 percent of the rate change one month after the change in
market rate. NOW and regular savings deposit accounts are considered to
be non-interest rate sensitive. Loan prepayment rates are based upon
market consensus estimates for similar securities. Certain shortcomings
are inherent in the simulation presented by the above table. For
example, certain financial assets and liabilities may have similar
maturities or periods for repricing that may react in different degrees
to changes in market interest rates.
In addition to the above, the Bank has entered into an
interest rate derivative contract known as a "cap" to help protect the
Bank's interest margin in periods of rising rates, the impact of which
is reflected in the change in future earnings in the rising rate
scenario (see Note 3). The potential changes in future earnings shown
above are within the Bank's interest rate risk policy limits.
17
<PAGE>
PART II - OTHER INFORMATION
ITEM 1: Legal Proceedings
Neither Republic 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 operations 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
Not applicable.
ITEM 5: Other information
Not applicable.
ITEM 6: Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report:
3.2(a) Bylaws of the Company (incorporated by reference to
the Exhibits to Form S-1 Registration Statement
initially filed August 7, 1985, File No. 2-99505)
3.2(b) Amendments to Bylaws of the Company (incorporated by
reference to Exhibit 3.2(b) to the Company's Form 10-K
filed on March 25, 1999)
3.2(c) Amendments to Bylaws of the Company (incorporated by
reference to Exhibit 3.2(c) to the Company's Form 10-K
filed on March 23, 2000)
3.2(d) RESOLVED, that Section 3.03 of the Company's By-laws
be amended, effective immediately prior to the
Annual Meeting of Shareholders on April 26, 2000, by
deleting the first sentence thereof in its entirety
and substituting the following therefore:
The Board of Directors shall consist of
fourteen directors.
3.2(e) RESOLVED, that Section 3.03 of the Company's By-laws
be amended, effective at the close of business on
August 23, 2000, by deleting the first sentence
thereof in its entirety and substituting the following
therefore:
The Board of Directors shall consist of
thirteen directors.
27 Financial Data Schedule (for SEC use only)
(b) During the three months ended September 30, 2000, the
Company filed a Current Report on Form 8-K dated July 14,
2000, reporting its earnings for the quarter ended June 30,
2000.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
REPUBLIC SECURITY FINANCIAL CORPORATION
(Registrant)
Date: November 14, 2000 /s/Richard J. Haskins
-----------------------------------------
Richard J. Haskins
Senior Executive Vice President & CFO
(Principal Financial Officer)
Date: November 14, 2000 /s/Mark P. Snelling
-----------------------------------------
Mark P. Snelling
Vice President/Controller
(Duly Authorized Officer)
19
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. EXHIBIT DESCRIPTION
----------- -------------------
27 Financial Data Schedule
