UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
September 30, 2002
Commission file number 0-27652
REPUBLIC BANCSHARES, INC.
| FLORIDA | 59-3347653 | |
| (State of incorporation) | (IRS Employer Identification No.) | |
| 111 2nd Avenue N.E., St. Petersburg, FL | 33701 | |
| (Address of Principal Office) | (Zip Code) |
(727) 823-7300
(Registrant’s Telephone Number, Including Area Code)
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 [ ]
At October 31, 2002, 11,397,879 shares of the registrant’s $2.00 par value common stock were outstanding.
REPUBLIC BANCSHARES, INC.
INDEX
| Page | ||||||||||||
| Part I | FINANCIAL INFORMATION |
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| Item 1. | Financial Statements (unaudited) |
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Consolidated Balance Sheets – September 30, 2002 and December 31, 2001 |
1 | |||||||||||
Consolidated Statements of Operations –
Three and nine month periods ended September 30, 2002 and 2001 |
2 | |||||||||||
Consolidated Statements of Stockholders’ Equity –
Year ended December 31, 2001 and
nine months ended September 30, 2002 |
3 | |||||||||||
Consolidated Statements of Comprehensive Income –
Three and nine month periods ended September 30, 2002 and 2001 |
3 | |||||||||||
Consolidated Statements of Cash Flows –
Nine month periods ended September 30, 2002 and 2001 |
4 | |||||||||||
Notes to Consolidated Financial Statements |
5 | |||||||||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition
and Results of Operations |
|||||||||||
Selected Quarterly Financial Information and Other Data |
15 | |||||||||||
Comparison of Balance Sheets at September 30, 2002 and December 31, 2001 |
18 | |||||||||||
Comparison of Results of Operations for the Three Months and the Nine Months
ended September 30, 2002 and 2001 |
20 | |||||||||||
| Item 3. | Interest Rate Risk Management |
25 | ||||||||||
| Item 4. | Controls and Procedures |
26 | ||||||||||
| Part II | OTHER INFORMATION |
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| Item 1. | Legal Proceedings |
26 | ||||||||||
| Item 6. | Exhibits and Report on Form 8-K |
26 | ||||||||||
| SIGNATURES | 27 | |||||||||||
| Certifications | 28 | |||||||||||
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995
Certain statements contained in this Quarterly Report on Form 10-Q (other than the financial statements and statements of historical fact), including, without limitation, statements as to our expectations and beliefs presented under the caption, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” may constitute forward-looking statements. Forward-looking statements are made based upon our expectations and beliefs concerning events, many of which, by their nature, are inherently uncertain and outside of our control. It is possible that our actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements.
We caution readers that the assumptions which form the basis for forward-looking statements, with respect to or that may impact earnings for the year ending December 31, 2002, and thereafter, include many factors that are beyond our ability to control or estimate precisely. Some of those factors include: the adequacy of our loan loss allowance; our ability to recover any or all of the claim under our Financial Institution Bond; the market demand and acceptance of our loan and deposit products; the impact of competitive products; and changes in economic conditions, such as inflation or fluctuations in interest rates.
While we periodically reassess material trends and uncertainties affecting our results of operations and financial condition in connection with our preparation of management’s discussion and analysis contained in our quarterly report, we do not intend to review or revise any particular forward-looking statement referenced herein.
REPUBLIC BANCSHARES, INC. AND SUBSIDIARIES
| September 30, | December 31, | ||||||||||
| 2002 | 2001 | ||||||||||
ASSETS |
|||||||||||
Cash and due from banks |
$ | 51,028 | $ | 65,370 | |||||||
Interest bearing deposits with banks |
13,587 | 11,828 | |||||||||
Federal funds sold |
35,284 | 14,925 | |||||||||
Cash and cash equivalents |
99,899 | 92,123 | |||||||||
Securities: |
|||||||||||
Available for sale securities (at fair value) |
791,949 | 792,719 | |||||||||
Held to maturity securities (at amortized cost) |
14,440 | 21,470 | |||||||||
Trading securities (at fair value) |
8,274 | 19,877 | |||||||||
FHLB stock |
15,261 | 13,168 | |||||||||
Loans held for sale |
12,562 | — | |||||||||
Loans |
1,469,516 | 1,421,011 | |||||||||
Allowance for loan losses |
(31,595 | ) | (31,997 | ) | |||||||
Net loans |
1,437,921 | 1,389,014 | |||||||||
Premises and equipment, net |
42,574 | 42,800 | |||||||||
Other real estate owned, net |
19,129 | 16,893 | |||||||||
Accrued interest receivable |
11,112 | 12,368 | |||||||||
Goodwill |
2,726 | 2,726 | |||||||||
Premium on deposits |
16,322 | 18,397 | |||||||||
Other assets |
39,013 | 37,789 | |||||||||
Total assets |
$ | 2,511,182 | $ | 2,459,344 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Liabilities: |
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Deposits- |
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Noninterest bearing checking |
$ | 165,291 | $ | 152,972 | |||||||
Interest checking |
191,990 | 186,817 | |||||||||
Money market |
392,367 | 394,278 | |||||||||
Savings |
175,242 | 189,557 | |||||||||
Time deposits |
1,224,084 | 1,206,720 | |||||||||
Total deposits |
2,148,974 | 2,130,344 | |||||||||
Securities sold under agreements to repurchase |
34,689 | 34,169 | |||||||||
FHLB advances |
77,243 | 52,251 | |||||||||
Convertible subordinated debt |
29,321 | 29,287 | |||||||||
Other liabilities |
11,559 | 12,506 | |||||||||
Total liabilities |
2,301,786 | 2,258,557 | |||||||||
Company-obligated mandatorily redeemable preferred
securities of subsidiary trust solely holding junior
subordinated debentures of the Company |
28,750 | 28,750 | |||||||||
Stockholders’ equity: |
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Common stock ($2.00 par; 20,000,000 shares authorized; 11,397,669
and 11,335,339 shares issued and outstanding at September 30, 2002
and December 31, 2001, respectively.) |
22,795 | 22,671 | |||||||||
Capital surplus |
129,755 | 129,056 | |||||||||
Retained earnings |
21,894 | 17,639 | |||||||||
Accumulated other comprehensive income |
6,202 | 2,671 | |||||||||
Total stockholders’ equity |
180,646 | 172,037 | |||||||||
Total liabilities and stockholders’ equity |
$ | 2,511,182 | $ | 2,459,344 | |||||||
The accompanying notes are an integral part of these consolidated balance sheets
1
REPUBLIC BANCSHARES, INC. AND SUBSIDIARIES
| Three Months Ended Sept. 30, | Nine Months Ended Sept. 30, | |||||||||||||||||
| 2002 | 2001 | 2002 | 2001 | |||||||||||||||
Interest income: |
||||||||||||||||||
Loans |
$ | 25,400 | $ | 29,402 | $ | 76,483 | $ | 96,992 | ||||||||||
Securities |
10,234 | 9,637 | 32,067 | 23,744 | ||||||||||||||
Federal funds sold & other investments |
277 | 928 | 851 | 6,131 | ||||||||||||||
Total interest income |
35,911 | 39,967 | 109,401 | 126,867 | ||||||||||||||
Interest expense: |
||||||||||||||||||
Deposits |
14,733 | 22,664 | 46,998 | 73,071 | ||||||||||||||
Securities sold under agreement to repurchase |
123 | 326 | 372 | 1,150 | ||||||||||||||
FHLB advances |
361 | 45 | 1,556 | 71 | ||||||||||||||
Holding company debt |
536 | 534 | 1,609 | 1,681 | ||||||||||||||
Total interest expense |
15,753 | 23,569 | 50,535 | 75,973 | ||||||||||||||
Net interest income |
20,158 | 16,398 | 58,866 | 50,894 | ||||||||||||||
Provision for loan losses |
1,650 | 6,800 | 4,750 | 11,350 | ||||||||||||||
Net interest income after provision
for loan losses |
18,508 | 9,598 | 54,116 | 39,544 | ||||||||||||||
Noninterest income: |
||||||||||||||||||
Service charges on deposit accounts |
1,550 | 1,768 | 4,724 | 5,661 | ||||||||||||||
Loan service fees, net |
(630 | ) | 199 | (666 | ) | 2,183 | ||||||||||||
Other loan fee income |
651 | 569 | 1,973 | 2,732 | ||||||||||||||
Gains on loans & securities, net |
2,133 | 1,515 | 3,090 | 4,195 | ||||||||||||||
Gain on sale of branches |
— | — | — | 4,483 | ||||||||||||||
Other operating income |
403 | 1,598 | 1,548 | 2,382 | ||||||||||||||
Total noninterest income |
4,107 | 5,649 | 10,669 | 21,636 | ||||||||||||||
Noninterest expense: |
||||||||||||||||||
Salaries and employee benefits |
9,279 | 9,919 | 28,861 | 29,365 | ||||||||||||||
Net occupancy expense |
3,254 | 3,510 | 9,567 | 10,103 | ||||||||||||||
Advertising and marketing |
235 | 159 | 704 | 1,338 | ||||||||||||||
Data & item processing fees and services |
1,587 | 1,824 | 4,691 | 5,473 | ||||||||||||||
Loan collection costs |
(105 | ) | 530 | 809 | 1,540 | |||||||||||||
Other operating expenses |
2,950 | 2,471 | 8,228 | 7,847 | ||||||||||||||
ORE expense, net |
1,323 | 32 | 833 | 412 | ||||||||||||||
Amortization of goodwill |
— | 119 | — | 358 | ||||||||||||||
Amortization of premium on deposits |
692 | 692 | 2,075 | 2,280 | ||||||||||||||
Total noninterest expense |
19,215 | 19,256 | 55,768 | 58,716 | ||||||||||||||
Income (loss) before income taxes
& minority interest |
3,400 | (4,009 | ) | 9,017 | 2,464 | |||||||||||||
Income tax (expense) benefit |
(1,373 | ) | 1,385 | (3,499 | ) | (919 | ) | |||||||||||
Income (loss) before minority interest |
2,027 | (2,624 | ) | 5,518 | 1,545 | |||||||||||||
Minority interest in income from subsidiary
trust, net of tax |
(421 | ) | (421 | ) | (1,263 | ) | (1,263 | ) | ||||||||||
Net income (loss) |
$ | 1,606 | $ | (3,045 | ) | $ | 4,255 | $ | 282 | |||||||||
Per share data: |
||||||||||||||||||
Basic net income (loss) per common share |
$ | 0.14 | $ | (0.27 | ) | $ | 0.37 | $ | 0.01 | |||||||||
Diluted net income (loss) per common
& common equivalent share |
$ | 0.14 | $ | (0.27 | ) | $ | 0.37 | $ | 0.01 | |||||||||
Weighted average common shares
outstanding – basic |
11,385,631 | 11,328,559 | 11,363,881 | 10,827,657 | ||||||||||||||
Weighted average common & common
equivalent shares outstanding – diluted |
11,501,214 | 11,328,559 | 11,452,070 | 10,870,994 | ||||||||||||||
The accompanying notes are an integral part of these consolidated statements.
2
REPUBLIC BANCSHARES, INC. AND SUBSIDIARIES
| Accumulated Other | ||||||||||||||||||||||||
| Perpetual Preferred | Capital | Retained | Comprehensive | |||||||||||||||||||||
| Convertible Stock | Common Stock | Surplus | Earnings | Income | Total | |||||||||||||||||||
Balance, December 31, 2000 |
$ | 1,500 | $ | 21,112 | $ | 128,735 | $ | 21,669 | $ | (675 | ) | $ | 172,341 | |||||||||||
Net loss |
— | — | — | (3,898 | ) | — | (3,898 | ) | ||||||||||||||||
Change in fair value of
available for sale securities,
net of tax effect |
— | — | — | — | 3,346 | 3,346 | ||||||||||||||||||
Conversion of preferred stock
into 750,000 common shares |
(1,500 | ) | 1,500 | — | — | — | — | |||||||||||||||||
Exercise of stock options into
29,350 shares |
— | 59 | 299 | — | — | 358 | ||||||||||||||||||