SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the Quarter Ended June 30, 1997 Commission File Number 0-15734
REPUBLIC BANCORP INC.
(Exact name of registrant as specified in its charter)
Michigan 38-2604669
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1070 East Main Street, Owosso, Michigan 48867
(Address of principal executive offices)
(517) 725-7337
(Registrant's telephone number)
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.
Common Stock Outstanding as of July 31, 1997:
Common Stock, $5 Par Value ........................... 16,913,205 Shares
INDEX
PART I...FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets as of June 30, 1997
and December 31, 1996 ................................. 3
Consolidated Statements of Income for the Three and Six
Months Ended June 30, 1997 and 1996.................... 4
Consolidated Statements of Cash Flows for the Six
Months Ended June 30, 1997 and 1996.................... 5
Notes to Consolidated Financial Statements............. 6
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition........... 7 - 18
PART II. OTHER INFORMATION
Item 1. Legal Proceedings................................... 19
Item 2. Changes in Securities............................... 19
Item 6. Exhibits and Reports on Form 8-K.................... 19
SIGNATURE .................................................... 20
EXHIBITS............................................................ 21 - 50
2
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
REPUBLIC BANCORP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
June 30, December 31,
(Dollars in thousands) 1997 1996
-------- ------------
ASSETS
Interest Income:
Cash and cash equivalents ............................ $ 22,508 $ 40,114
Mortgage loans held for sale ......................... 367,190 329,157
Securities available for sale (amortized cost of
$224,265 and $232,388, respectively) .............. 221,855 228,621
Loans ................................................ 958,497 784,628
Less allowance for loan losses .................... (7,142) (4,709)
----------- -----------
Net loans ............................................ 951,355 779,919
----------- -----------
Premises and equipment, net of depreciation .......... 11,716 15,008
Mortgage servicing rights ............................ 50,322 44,398
Other assets ......................................... 46,662 53,148
---------- -----------
Total assets .................................... $ 1,671,608 $ 1,490,365
=========== ===========
LIABILITIES
Noninterest-bearing deposits ......................... $ 139,200 $ 126,940
Interest-bearing deposits ............................ 909,973 886,767
----------- -----------
Total deposits .................................. 1,049,173 1,013,707
Federal funds purchased and securities sold under
agreements to repurchase ........................ 160,788 115,156
Other short-term borrowings .......................... 6,649 5,986
Short-term FHLB advances ............................. 115,483 39,000
Long-term FHLB advances .............................. 117,632 95,200
Accrued expenses and other liabilities ............... 51,127 49,243
Long-term debt ....................................... 47,500 49,189
----------- -----------
Total liabilities ............................... 1,548,352 1,367,481
Minority interest .................................... 1,015 1,069
----------- -----------
SHAREHOLDERS' EQUITY
Preferred stock, $25 stated value: $2.25 cumulative
and convertible; 5,000,000 shares authorized,
none issued and outstanding ....................... -- --
Common stock, $5 par value, 30,000,000 shares
authorized; 16,898,895 and 17,129,142 shares
issued and outstanding, respectively .............. 84,495 85,646
Capital surplus ...................................... 32,959 37,538
Retained earnings .................................... 6,354 1,079
Net unrealized losses on securities available for sale (1,567) (2,448)
---------- -----------
Total shareholders' equity ...................... 122,241 121,815
----------- -----------
Total liabilities and shareholders' equity ...... $ 1,671,608 $ 1,490,365
=========== ===========
<FN>
See notes to consolidated financial statements.
3
REPUBLIC BANCORP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
(In thousands, except per share data) 1997 1996 1997 1996
------------------ ----------------
Interest Income:
Loans, including fees ................................... $ 24,389 $ 19,322 $ 45,919 $ 38,396
Investment securities ................................... 3,769 4,852 7,135 9,672
Money market investments ................................ 44 42 194 310
-------- -------- -------- --------
Total interest income ............................ 28,202 24,216 53,248 48,378
-------- -------- -------- --------
Interest Expense:
Demand deposits ......................................... 290 347 601 698
Savings and time deposits ............................... 11,310 9,884 22,066 19,972
Short-term borrowings ................................... 1,816 2,844 3,070 6,151
FHLB advances ........................................... 2,745 1,372 4,592 2,618
Long-term debt .......................................... 857 892 1,746 1,961
-------- -------- -------- --------
Total interest expense ........................... 17,018 15,339 32,075 31,400
-------- -------- -------- --------
Net interest income ..................................... 11,184 8,877 21,173 16,978
Provision for loan losses ............................... 2,188 45 2,485 110
-------- -------- -------- --------
Net interest income after provision for loan losses ..... 8,996 8,832 18,688 16,868
-------- -------- -------- --------
Noninterest Income:
Service charges ......................................... 359 287 711 606
Mortgage banking ........................................ 21,241 20,909 40,191 40,353
Gains (losses) on sales of securities ................... (682) (7) (645) 428
Gains on sales of SBA loans ............................. 291 255 475 475
Gain on sale of bank branches and deposits .............. 4,442 -- 4,442 --
Other noninterest income ................................ 454 291 1,267 536
-------- -------- -------- --------
Total noninterest income ......................... 26,105 21,735 46,441 42,398
-------- -------- -------- --------
Noninterest Expense:
Salaries and employee benefits .......................... 11,524 9,680 21,557 19,852
Mortgage loan commissions ............................... 7,008 6,207 12,124 11,753
Occupancy expense of premises ........................... 1,805 1,485 3,538 2,936
Equipment expense ....................................... 1,097 1,145 2,198 2,315
Other noninterest expense ............................... 6,498 5,733 12,668 11,582
-------- -------- -------- --------
Total noninterest expense ........................ 27,932 24,250 52,085 48,438
-------- -------- -------- --------
Income before income taxes and extraordinary item ....... 7,169 6,317 13,044 10,828
Provision for income taxes .............................. 2,456 2,171 4,375 3,667
-------- -------- -------- --------
Income before extraordinary item ........................ 4,713 4,146 8,669 7,161
Extraordinary item (early redemption of debt, net of tax) -- -- -- (388)
-------- -------- -------- --------
Net Income .............................................. $ 4,713 $ 4,146 $ 8,669 $ 6,773
======== ======== ======== ========
Income per common share before extraordinary item ....... $ .27 $ .23 $ .50 $ .39
Extraordinary item ...................................... -- -- -- (.02)
-------- -------- -------- --------
Net income per common share - primary and fully diluted . $ .27 $ .23 $ .50 $ .37
======== ======== ======== ========
Average common shares outstanding - fully diluted ....... 17,258 18,208 17,400 18,336
======== ======== ======== ========
Cash dividends declared per common share ................ $ .10 $ .09 $ .20 $ .18
======== ======== ======== ========
<FN>
See notes to consolidated financial statements.
4
REPUBLIC BANCORP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended June 30 (In thousands) 1997 1996
---- ----
Cash Flows From Operating Activities:
Net income .......................................................... $ 8,669 $ 6,773
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization .................................. 2,431 2,716
Amortization of mortgage servicing rights ...................... 2,996 4,279
Net (gains) losses on sale of securities available for sale .... 645 (428)
Net gains on sale of mortgage servicing rights ................. (8,857) (15,747)
Net gains on sale of loans ..................................... (2,011) (2,390)
Origination of mortgage loans held for sale .................... (1,496,661) (1,718,181)
Proceeds from sales of mortgage loans held for sale ............ 1,458,628 1,764,724
(Increase) decrease in other assets ............................ 5,798 (1,111)
Increase in other liabilities .................................. 1,883 16,469
Other, net ..................................................... 1,020 (729)
----------- -----------
Total adjustments ............................................ (34,128) 49,602
----------- -----------
Net cash provided by (used in) operating activities ...... (25,459) 56,375
----------- -----------
Cash Flows From Investing Activities:
Proceeds from sale of securities available for sale ................. 93,901 71,492
Proceeds from maturities/prepayments of securities available for sale 11,574 16,084
Purchases of securities available for sale .......................... (98,269) (99,361)
Proceeds from sale of loans ......................................... 88,953 75,598
Net increase in loans made to customers ............................. (259,074) (113,853)
Proceeds from sale of fixed assets .................................. 4,136 --
Proceeds from sale of mortgage servicing rights ..................... 8,105 20,994
Additions to mortgage servicing rights .............................. (11,903) (6,464)
----------- -----------
Net cash used in investing activities .................... (162,577) (35,510)
----------- -----------
Cash Flows From Financing Activities:
Net increase in deposits ............................................ 87,603 19,476
Sale of bank branch deposits ........................................ (52,136) --
Net increase (decrease) in short-term borrowings .................... 46,295 (59,132)
Net increase in short-term FHLB advances ............................ 76,483 19,000
Net increase in long-term FHLB advances ............................. 37,432 8,500
Payments on long-term FHLB advances ................................. (15,000) --
Proceeds from issuance of senior debentures, net of issuance costs .. -- 22,233
Payments on long-term debt .......................................... (1,689) (24,900)
Net proceeds from issuance of common shares ......................... 1,190 553
Repurchase of common shares ......................................... (6,319) (7,138)
Dividends paid ...................................................... (3,429) (3,121)
----------- -----------
Net cash provided by (used in) financing activities ...... 170,430 (24,529)
----------- -----------
Net decrease in cash and cash equivalents ........................... (17,606) (3,664)
Cash and cash equivalents at beginning of period .................... 40,114 39,641
----------- -----------
Cash and cash equivalents at end of period .......................... $ 22,508 $ 35,977
=========== ===========
<FN>
See notes to consolidated financial statements.
5
REPUBLIC BANCORP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 1 - Basis of Presentation
The accompanying unaudited consolidated financial statements of Republic
Bancorp Inc. and Subsidiaries (the "Company") have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01
of Regulation S-X. Accordingly, they do not include all of the information
and footnotes necessary for a comprehensive presentation of financial
position, results of operations and cash flow activity required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all normal recurring adjustments necessary for a fair
presentation of results have been included. 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, 1996.
Certain amounts in prior periods have been reclassified to conform to the
current year's presentation.
Note 2 - Principles of Consolidation
The consolidated financial statements include the accounts of the parent
company, Republic Bancorp Inc., two wholly-owned subsidiaries, Republic Bank
and Republic Savings Bank ("Republic Savings"), and Market Street Mortgage
Corporation ("Market Street"), of which the Company owns an 80% majority
interest. Republic Bank operates two wholly-owned subsidiaries: Republic
Bancorp Mortgage Inc. ("Republic Mortgage"), including its two divisions,
Home Funding, Inc. and Unlimited Mortgage Services, Inc., and CUB Funding
Corporation ("CUB Funding"), including its two divisions, RSL Mortgage and
Leader Financial. All material intercompany transactions and balances have
been eliminated in consolidation. On July 1, 1997, the Company transferred
its 80% majority ownership interest in Market Street to Republic Bank.
Note 3 - Consolidated Statements of Cash Flows
Supplemental disclosures of cash flow information for the six months ended
June 30, include:
(In thousands) 1997 1996
- -------------- ---- ----
Cash paid during the period for:
Interest .................. $32,201 $33,040
Income taxes .............. $ -- $ 3,205
Non-cash investing activities:
Loan charge-offs .......... $ 142 $ 381
6
ITEM 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations
EARNINGS PERFORMANCE
The Company reported net income of $4.7 million for the quarter ended June
30, 1997, an increase of 14% when compared to $4.1 million earned in the
second quarter of 1996. Fully diluted earnings per share for the quarter were
$0.27, up 17% from $0.23 for the same period last year. Return on average
shareholders' equity was 15.62% and return on average assets was 1.22% for
the quarter, compared to 13.56% and 1.13%, respectively, in 1996.
For the six months ended June 30, 1997, the Company earned $8.7 million, an
increase of 28% over the $6.8 million reported for the corresponding period
in 1996. Fully diluted earnings per share were $.50, up 35% from $.37 for the
first six months of 1996. Return on average shareholders' equity was 14.32%
and return on average assets was 1.17% for the first half of 1997, compared
to 10.90% and .93%, respectively, in 1996.
RESULTS OF OPERATIONS
Mortgage Banking
The following discussion provides information that relates specifically to
the Company's mortgage banking line of business, which generates revenue from
mortgage loan production and mortgage loan servicing activities. Mortgage
banking revenue represents the largest component of the Company's total
noninterest income.
The Company closed $960 million in single-family residential mortgage loans
in the second quarter of 1997, compared to $936 million closed in the same
period last year. Mortgage loan closings remained relatively stable over the
past year as a 14% increase in retail production was largely offset by a
reduction in the Company's wholesale mortgage production activities. A
gradual decline in market interest rates during the second quarter of 1997
also favorably impacted mortgage loan volumes. During the first half of 1997,
mortgage loan closings were $1.7 billion, compared to $1.8 billion for the
comparable period in 1996.
The following table summarizes the Company's income from mortgage banking
activities:
Three Months Ended Six Months Ended
June 30, June 30,
(In thousands) 1997 1996 1997 1996
------------------ ----------------
Mortgage loan production income (1) ..... $18,318 $18,299 $35,541 $35,846
Net mortgage loan servicing income ...... 1,819 2,082 3,546 4,099
Gains on bulk sales of mortgage servicing 1,104 528 1,104 408
------- ------- ------- -------
Total mortgage banking income ..... $21,241 $20,909 $40,191 $40,353
======= ======= ======= =======
<FN>
(1) Includes fee income derived from the loan origination process (i.e.,
points collected), gains on the sale of mortgage loans and gains on the
sale of mortgage servicing rights released concurrently with the
underlying loans sold.
For the three months ended June 30, 1997, mortgage banking income increased
slightly to $21.2 million from $20.9 million a year earlier, as a decrease in
mortgage loan servicing income was offset by increased gains from the sale of
mortgage loans and mortgage servicing rights. The Company sold $807 million
of single-family mortgage loans in the second quarter of 1997 versus $938
million in the second quarter of 1996. An increase in retail production as a
percentage of total mortgage loan origination volume over the past year
resulted in improved margins on the sale of these mortgage loans. As a
result, the ratio of mortgage loan production
7
income to mortgage loans sold increased 21 basis points to 227 basis points
for the three months ended June 30, 1997, from 206 basis points for the
corresponding quarter in 1996.
For the six months ended June 30, 1997, mortgage banking income remained
relatively consistent compared to the same period a year ago, reflecting the
net result of a decrease in mortgage loan servicing income and an increase in
gains on the sale of mortgage loans and mortgage servicing rights. Mortgage
loan sales totaled $1.5 billion for the first half of 1997, compared to $1.8
billion in 1996. Profitability levels increased as the ratio of mortgage
production income to mortgage loans sold rose 30 basis points to 231 basis
points for the six months ended June 30, 1997 from 201 basis points for the
year-earlier period.
Loans serviced for the benefit of others totaled $2.9 billion at June 30,
1997, compared to $2.7 billion at December 31, 1996 and $3.3 billion at June
30, 1996. Net mortgage loan servicing income declined 13% for both the
quarter and six months ended June 30, 1997, reflecting the overall reduction
in the size of the servicing portfolio over the past year as the Company
centralized its mortgage servicing activities at Market Street.
The Company periodically sells mortgage servicing rights (MSRs) from its
servicing portfolio through bulk sales. For the quarter and six months ended
June 30, 1997, MSRs for loans with a principal balance of $247.2 million were
sold, resulting in a net gain of $1.1 million. In the second quarter of 1996,
bulk sales of MSRs for loans with a principal balance of $475.5 million
resulted in gains totaling $528,000. During the first half of 1996, MSRs for
loans with a principal balance of $694.1 million were sold in bulk form,
resulting in gains totaling $408,000.
Commercial and Retail Banking
The remaining disclosures and analyses within Management's Discussion and
Analysis regarding the Company's results of operations and financial
condition relate principally to the commercial and retail banking line of
business.
Net Interest Income
The following discussion should be read in conjunction with Tables I and II
on the following pages, which provide detailed analyses of the components
impacting net interest income for the three months and six months ended June
30, 1997 and 1996.
Net interest income, on a fully taxable equivalent (FTE) basis, was $11.3
million for the second quarter of 1997, an increase of $2.2 million, or 24%,
over the second quarter of 1996. The increase in net interest income was
driven by strong loan growth. Average portfolio loans for the second quarter
of 1997 rose $333.6 million, or 57%, over the comparable quarter last year,
reflecting growth across all lending categories. This growth was partially
funded by reductions in the average balances of investment securities and
mortgage loans held for sale, as well as a $107.1 million increase in average
interest-bearing deposits.
The net interest margin (FTE) was 3.17% for the quarter ended June 30, 1997,
an increase of 35 basis points from 2.82% in 1996. The expansion in the
margin was primarily due to growth in higher-yielding portfolio loan
categories, coupled with a reduction in lower-yielding investment securities.
This favorable shift in the mix of earning assets was principally responsible
for a 40 basis point increase in the yield on average earning assets. Also
contributing to the improved margin was a slight shift in the mix of
interest-bearing liabilities toward lower-costing deposits.
8
Table I - Quarterly Net Interest Income and Rate/Volume Analysis (FTE)
Three Months Ended Three Months Ended
June 30, 1997 June 30, 1996
------------------ ------------------
Average Average Average Average
(Dollars in thousands) Balance(1) Interest Rate Balance(1) Interest Rate
- ---------------------- ---------- -------- ------- ---------- -------- -------
Assets:
Money market investments.......................... $ 4,508 $ 44 3.91% $ 3,176 $ 42 5.29%
Mortgage loans held for sale...................... 258,986 5,087 7.86 377,986 7,163 7.58
Investment securities available for sale.......... 237,356 3,893 6.56 320,663 5,063 6.32
Commercial loans.................................. 230,609 5,579 9.70 155,738 3,597 9.24
Residential real estate mortgage loans............ 602,860 11,464 7.61 363,834 6,807 7.48
Installment loans................................. 89,198 2,259 10.16 69,542 1,755 10.09
----------- -------- ----- ----------- -------- -----
Loans, net of unearned income.................. 922,667 19,302 8.38 589,114 12,159 8.26
----------- -------- ----- ----------- -------- -----
Total interest-earning assets................ 1,423,517 28,326 7.97 1,290,939 24,427 7.57
Allowance for loan losses......................... (5,794) (4,903)
Cash and due from banks........................... 22,283 27,583
Other assets...................................... 99,888 156,972
----------- -----------
Total assets................................. $ 1,539,894 $ 1,470,591
=========== ===========
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits.................. $ 53,115 290 2.19 $ 59,042 347 2.35
Savings deposits and money market accounts........ 266,867 3,018 4.54 212,893 2,164 4.07
Time deposits..................................... 585,889 8,292 5.68 526,808 7,720 5.86
----------- -------- ----- ----------- ------- -----
Total interest-bearing deposits................ 905,871 11,600 5.14 798,743 10,231 5.12
Warehouse lines of credit......................... -- -- -- 4,056 60 5.92
Federal funds purchased and securites sold
under agreement to repurchase.................. 111,400 1,586 5.71 184,885 2,764 6.00
Other short-term borrowings....................... 12,992 230 7.10 1,035 20 7.75
FHLB advances.................................... 188,815 2,744 5.83 94,602 1,372 5.82
Long-term debt.................................... 47,500 858 7.23 49,359 892 7.23
----------- -------- ----- ----------- ------- -----
Total interest-bearing liabilities........... 1,266,578 17,018 5.39 1,132,680 15,339 5.42
-------- ----- ------- -----
Noninterest-bearing deposits...................... 119,786 131,857
Other liabilities................................. 32,805 83,733
----------- -----------
Total liabilities............................ 1,419,169 1,348,270
Shareholders' equity.............................. 120,725 122,321
----------- -----------
Total liabilities and shareholders' equity... $ 1,539,894 $ 1,470,591
=========== ===========
Net interest income/Rate spread (FTE)............. $ 11,308 2.58% $ 9,088 2.15%
======== ==== ======= ====
Net interest margin (FTE)......................... 3.17% 2.82%
==== ====
Increase (decrease) due to change in: Volume(2) Rate(2) Net Inc(Dec)
------------------------------------- --------- ------- ------------
Money market investments................. $ 15 $ (13) $ 2
Mortgage loans held for sale............. (2,332) 256 (2,076)
Investment securities available for sale. (1,356) 186 (1,170)
Commercial loans......................... 1,796 186 1,982
Residential real estate mortgage loans... 4,537 120 4,657
Installment loans........................ 492 12 504
------- ------ ---------
Loans, net of unearned income.......... 6,825 318 7,143
------- ------ ---------
Total interest income............... 3,152 747 3,899
Interest-bearing demand deposits......... (34) (23) (57)
Savings deposits......................... 587 267 854
Time deposits............................ 821 (249) 572
------- ------ ---------
Total interest-bearing deposits........ 1,374 (5) 1,369
Warehousing lines of credit.............. (60) -- (60)
Federal funds purchased and securities sold
under agreement to repurchase.......... (1,050) (128) (1,178)
Other short-term borrowings.............. 212 (2) 210
FHLB advances............................ 1,371 2 1,373
Long-term debt........................... ( 35) -- (35)
------- ------ ---------
Total interest expense............. 1,812 (133) 1,679
------- ------ ---------
Net interest income................. $ 1,340 $ 880 $ 2,220
======= ====== =========
<FN>
(1) Non-accrual loans and overdrafts are included in average balances.
(2) Rate/volume variances are proportionately allocated to rate and volume
based on the absolute value of the change in each.
9
Table II - Year-to-Date Net Interest Income and Rate/Volume Analysis (FTE)
Six Months Ended Six Months Ended
June 30, 1997 June 30, 1996
---------------- ----------------
Average Average Average Average
(Dollars in thousands) Balance(1) Interest Rate Balance(1) Interest Rate
- ---------------------- ---------- -------- ------- ---------- -------- -------
Assets:
Money market investments.......................... $ 9,029 $ 194 4.36% $ 11,538 $ 310 5.37%
Mortgage loans held for sale...................... 249,079 9,747 7.83 374,376 14,096 7.53
Securities........................................ 230,781 7,409 6.39 317,725 10,041 6.32
Commercial loans.................................. 214,446 10,300 9.69 148,476 6,983 9.41
Residential real estate mortgage loans............ 569,968 21,545 7.56 369,354 13,939 7.55
Installment loans................................. 86,866 4,327 10.05 67,911 3,378 9.95
------------- --------- ----- ----------- --------- ----
Loans, net of unearned income.................. 871,280 36,172 8.33 585,741 24,300 8.30
------------- --------- ----- ----------- --------- ----
Total interest-earning assets................ 1,360,169 53,522 7.88 1,289,380 48,747 7.56
Allowance for loan losses......................... (5,301) (4,926)
Cash and due from banks........................... 21,436 25,038
Other assets...................................... 103,076 140,164
------------- -----------
Total assets................................. $ 1,479,380 $ 1,449,656
============= ===========
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits.................. $ 55,291 601 2.19 $ 59,622 698 2.34
Savings deposits.................................. 265,358 5,830 4.43 204,338 4,037 3.95
Time deposits..................................... 576,548 16,236 5.68 537,011 15,935 5.93
------------- --------- ----- ----------- --------- ----
Total interest-bearing deposits................ 897,197 22,667 5.09 800,971 20,670 5.16
Warehousing lines of credit....................... -- -- -- 45,834 1,561 6.81
Federal funds purchased and securities sold
under agreement to repurchase.................. 95,338 2,684 5.68 151,018 4,471 5.97
Other short-term borrowings....................... 10,937 386 7.12 3,096 119 7.75
FHLB advances.................................... 158,207 4,592 5.85 90,360 2,618 5.79
Long-term debt.................................... 48,396 1,746 7.22 52,423 1,961 7.48
------------- --------- ----- ----------- --------- ----
Total interest-bearing liabilities........... 1,210,075 32,075 5.34 1,143,702 31,400 5.49
--------- ----- --------- ----
Noninterest-bearing deposits...................... 115,468 127,941
Other liabilities................................. 32,739 53,744
------------- -----------
Total liabilities............................ 1,358,282 1,325,387
Shareholders' equity.............................. 121,098 124,269
------------- -----------
Total liabilities and shareholders' equity... $ 1,479,380 $ 1,449,656
============= ===========
Net interest income/Rate spread (FTE)............. $ 21,447 2.54% $ 17,347 2.07%
========= ==== ========= ====
Net interest margin............................... 3.15% 2.69%
==== ====
Increase (decrease) due to change in: Volume(2) Rate(2) Net Inc(Dec)
------------------------------------- --------- ------- ------------
Money market investments................. $ (63) $ (53) $ (116)
Mortgage loans held for sale............. (4,890) 541 (4,349)
Securities............................... (2,743) 111 (2,632)
Commercial loans......................... 3,109 208 3,317
Residential real estate mortgage loans... 7,588 18 7,606
Installment loans........................ 916 33 949
--------- ------ ---------
Loans, net of unearned income.......... 11,613 259 11,872
--------- ------ ---------
Total interest income............... 3,917 858 4,775
Interest-bearing demand deposits......... (50) (47) (97)
Savings deposits......................... 1,275 518 1,793
Time deposits............................ 1,045 (744) 301
--------- ------ ---------
Total interest-bearing deposits........ 2,270 (273) 1,997
Warehousing lines of credit.............. (1,561) -- (1,561)
Federal funds purchased and securities sold
under agreement to repurchase.......... (1,579) (208) (1,787)
Other short-term borrowings.............. 278 (11) 267
FHLB advances............................ 1,947 27 1,974
Long-term debt........................... (148) (67) (215)
--------- ------ ---------
Total interest expense............. 1,207 (532) 675
--------- ------ ---------
Net interest income................. $ 2,710 $1,390 $ 4,100
========= ====== =========
10
<FN>
(1) Non-accrual loans and overdrafts are included in average balances.
(2) Rate/volume variances are proportionately allocated to rate and volume
based on the absolute value of the change in each.
For the six months ended June 30, 1997, net interest income (FTE) was $21.4
million, an increase of $4.1 million, or 24%, over the first half of 1996.
This increase was fueled primarily by a $285.5 million, or 49%, increase in
average portfolio loans. Partly funding the growth in portfolio loans were
reductions in the average balances of investment securities and mortgage
loans held for sale. Net interest income growth was partially offset by the
expense associated with a $96.2 million, or 12%, increase in average
interest-bearing deposits.
The net interest margin (FTE) for the six months ended June 30, 1997, rose 46
basis points to 3.15% from 2.69% for the comparable period in 1996, primarily
due to a favorable shift in the mix of earning assets toward higher-yielding
loan products. This shift was largely responsible for a 32 basis point
increase in the yield on average earning assets. Also, contributing to the
improved margin for the first half of 1997 was a 15 basis point decline in
the average rate paid on interest-bearing liabilities. This resulted from
growth in the Company's average interest-bearing deposits and a decline in
the average balances of higher-costing sources of funds.
Noninterest Income
As previously announced, in May 1997, the Company completed the sale of four
southern Michigan branches of Republic Bank. The sale included the premises
and deposits of the Hanover, Litchfield, Somerset Center and Spring Arbor
offices, which had total deposits of $52 million. The pre-tax gain on the
sale was $4.4 million.
Noninterest Expense
For the quarter ended June 30, 1997, total noninterest expense increased $3.7
million, or 15%, to $27.9 million from $24.3 million a year earlier. On a
year-to-date basis, total noninterest expense was $52.1 million, up $3.6
million, or 8%, over the first six months of 1996. The rise in noninterest
expense reflects both an increase in salaries and employee benefits as new
employees have been hired and an increase in commissions expense as a result
of higher retail mortgage loan originations.
BALANCE SHEET ANALYSIS
ASSETS
At June 30, 1997, the Company had $1.67 billion in total assets, an increase
of $181.2 million, or 12%, from $1.49 billion at December 31, 1996. Asset
growth was primarily the result of an increase in portfolio loans and
mortgage loans held for sale.
Securities
Investment securities available for sale declined $6.7 million, or 3%, to
$221.9 million, representing 13.3% of total assets, at June 30, 1997. At
December 31, 1996, the investment securities portfolio totaled $228.6
million, or 15.3% of total assets. During the second quarter of 1997, the
Company sold $46.6 million of lower-yielding securities and reinvested the
proceeds in higher-yielding portfolio loans and securities. Gross realized
gains and losses on sales of available-for-sale securities were $168,000 and
$850,000, respectively, for the quarter ended June 30, 1997. For the first
six months of 1997, gross realized gains and losses totaled $216,000 and
$861,000, respectively.
The Company's securities portfolio serves as a source of liquidity and
earnings, carries relatively minimal principal risk and contributes to the
management of interest rate risk. The portfolio is comprised primarily of
U.S. Government agency obligations, obligations collateralized by U.S.
Government agencies, mainly in the form of mortgage-backed securities and
collateralized mortgage obligations, and municipal obligations. With the
exception of municipal obligations, the maturity structure of the securities
portfolio is generally short-term in nature or indexed to variable rates.
11
The following table details the composition, amortized cost and fair value of
the Company's available-for-sale securities portfolio at June 30, 1997:
Available-for-Sale Securities
-----------------------------
Amortized Unrealized Unrealized Fair
(In thousands) Cost Gains Losses Value
- -------------- --------- ---------- ----------- -----
Debt Securities:
U.S. Government agency obligations................ $ 52,251 $ 73 $ 295 $ 52,029
Collateralized mortgage obligations............... 76,594 32 354 76,272
Mortgage-backed securities........................... 59,659 5 1,608 58,056
Mortgage-backed securities........................ 53,015 3 1,272 51,746
Municipal and other securities.................... 20,944 154 30 21,068
-------- ---- ------ --------
Total Debt Securities........................... 202,804 262 1,951 201,115
Equity securities.................................... 21,461 - 721 20,740
-------- ---- ------ --------
Total Available-for-Sale Securities............. $224,265 $262 $2,672 $221,855
======== ==== ====== ========
Certain securities having a carrying value of approximately $106.4 million
and $65.0 million at June 30, 1997 and December 31, 1996, respectively, were
pledged to secure repurchase agreements, FHLB advances, public and other
deposits as required by law.
Mortgage Loans Held for Sale
Mortgage loans held for sale were $367.2 million at June 30, 1997, an
increase of $38.0 million, or 12%, from $329.2 million at December 31, 1996.
This growth was caused by an increase in the volume of loans originated
near the end of the second quarter.
Portfolio Loans
Total portfolio loans were $958.5 million at June 30, 1997, an increase of
$173.9 million, or 22%, from $784.6 million at December 31, 1996, reflecting
growth in all lending areas. The residential mortgage portfolio loan balance
rose $114.1 million, or 23%, since year-end 1996 to $621.1 million at June
30, 1997, in response primarily to increased consumer demand for adjustable
rate mortgage loans. The installment loan portfolio balance, which is
predominantly comprised of home equity loans, grew $9.9 million, or 12%,
since year-end 1996 to $92.4 million at June 30, 1997, reflecting successful
marketing and sales efforts.
The commercial loan balance was $245.1 million at June 30, 1997, an increase
of $49.9 million, or 26%, from $195.2 million at December 31, 1996,
reflecting continued strong demand for real estate-secured lending in markets
served by the Company. During the second quarter of 1997, the Company closed
$6.0 million in Small Business Administration (SBA) loans, a 9% increase from
the $5.5 million closed in the second quarter of 1996. For the first six
months of 1997 and 1996, SBA loan closings were $10.2 million and $10.8
million, respectively. The Company sold $5.9 million and $5.8 million of the
guaranteed portion of SBA loans in the first six months of 1997 and 1996,
respectively, resulting in gains of $475,000 in both periods.
12
The following table provides further information regarding the Company's loan
portfolio:
June 30, 1997 December 31, 1996
------------------- --------------------
(Dollars in thousands) Amount Percent Amount Percent
- ---------------------- ------ ------- ------ -------
Commercial loans:
Commercial and industrial......................... $ 30,411 3.2% $ 29,483 3.8%
Real estate construction.......................... 44,997 4.7 32,946 4.2
Commercial real estate mortgage .................. 169,650 17.7 132,763 16.9
-------- ----- -------- -----
Total commercial loans....................... 245,058 25.6 195,192 24.9
Residential real estate mortgages.................... 621,084 64.8 506,944 64.6
Installment loans.................................... 92,355 9.6 82,492 10.5
-------- ----- -------- -----
Total portfolio loans......................... $958,497 100.0% $784,628 100.0%
======== ===== ======== =====
Credit Quality
The Company attempts to minimize credit risk in the loan portfolio by
focusing primarily on residential real estate mortgage lending, real
estate-secured commercial lending and home equity lending. As of June 30,
1997, such loans comprised approximately 94.6% of total portfolio loans. The
Company's general policy is to originate conventional residential real estate
mortgages with loan-to-value ratios of 80% or less and SBA-secured loans or
real estate-secured commercial loans with loan-to-value ratios of 70% or
less.
The substantial majority of the Company's residential mortgage loan
production is underwritten in compliance with the requirements for sale to or
conversion to mortgage-backed securities issued by the Federal Home Loan
Mortgage Corporation (FHLMC), the Federal National Mortgage Association
(FNMA), or the Government National Mortgage Association (GNMA). The majority
of the Company's commercial loans are secured by real estate and are
generally made to small and medium-size businesses. These loans are made at
rates based on the prevailing prime interest rates of Republic Bank and
Republic Savings Bank, as well as fixed rates for terms generally ranging
from three to five years. Management's emphasis on real estate-secured
lending with conservative loan-to-value ratios is reflected in the Company's
historically low net charge-off ratio percentages.
Non-Performing Assets
Non-performing assets consist of non-accrual loans, restructured loans and
other real estate owned (OREO). OREO represents real estate properties
acquired through foreclosure or by deed in lieu of foreclosure and is
classified as other assets on the balance sheet until such time as the
property is sold. Commercial loans, residential real estate mortgage loans
and installment loans are generally placed on non-accrual status when
principal or interest is 90 days or more past due, unless the loans are
well-secured and in the process of collection. Loans may be placed on
non-accrual status earlier when, in the opinion of management, reasonable
doubt exists as to the full, timely collection of interest or principal.
13
The following table summarizes the Company's non-performing assets and 90-day
past due loans:
June 30, December 31, June 30,
(Dollars in thousands) 1997 1996 1996
- ------------------------------------------------------------------------------------------------------
Non-Performing Assets:
Non-accrual loans:
Commercial...................................... $1,475 $1,321 $1,824
Residential real estate mortgages............... 5,689 3,968 1,686
Installment..................................... 47 50 157
------ ------ ------
Total non-accrual loans....................... 7,211 5,339 3,667
Restructured loans................................ -- -- --
------ ------ ------
Total non-performing loans.................... 7,211 5,339 3,667
Other real estate owned........................... 1,907 1,250 637
------ ------ ------
Total non-performing assets................... $9,118 $6,589 $4,304
====== ====== ======
Loans past due 90 days or more and still accruing interest:
Commercial........................................ $ 462 $ -- $ 327
Residential real estate mortgages................. -- 548 706
Installment....................................... 82 22 44
------ ------ ------
Total loans past due 90 days or more.......... $ 544 $ 570 $1,077
====== ====== ======
Non-performing assets as a percentage of:
Total portfolio loans and OREO (1).............. .95% .84% .69%
Total loans and OREO (2)........................ .69% .59% .43%
Total assets.................................... .55% .44% .29%
<FN>
(1) Excludes mortgage loans held for sale.
(2) Includes mortgage loans held for sale.
At June 30, 1997, approximately $7.4 million, or .77% of total portfolio
loans were 30-89 days delinquent, compared to $4.8 million, or .61%, at
December 31, 1996 and $6.0 million, or .97% at June 30, 1996.
Allowance for Loan Losses
Management is responsible for maintaining an adequate allowance for loan
losses. An appropriate level of the allowance is determined based on the
application of projected loss percentages to risk-rated loans, both
individually and by category. The projected loss percentages were developed
giving consideration to actual loan loss experience, adjusted for current and
prospective economic conditions. Management also considers other factors when
assessing the adequacy of the allowance for loan losses, including loan
quality, changes in the size and character of the loan portfolio and
consultation with regulatory agencies. In addition, specific reserves are
established for individual loans when deemed necessary by management.
14
Management believes the allowance for loan losses is adequate to meet
potential losses in the loan portfolio that can be reasonably anticipated
based on current conditions. In addition, 94.6% of the total loan portfolio
at June 30, 1997, was secured by real estate, thereby, reducing potential
losses. It must be understood, however, that inherent risks and uncertainties
related to the operation of a financial institution require management to
depend on estimates, appraisals and evaluations of loans to prepare the
Company's financial statements. Changes in economic conditions and the
financial prospects of borrowers may result in abrupt changes to the
estimates, appraisals or evaluations used. In addition, if actual
circumstances and losses differ substantially from management's assumptions
and estimates, the allowance for loan losses may not be sufficient to absorb
all future losses, and net income could be significantly and adversely
affected.
The following table provides an analysis of the allowance for loan losses:
Six Months Ended
June 30,
----------------
(Dollars in thousands) 1997 1996
- ---------------------- ---- ----
Allowance for loan losses:
Balance at January 1 .................................... $4,709 $5,002
Loans charged off .................................. (142) (381)
Recoveries of loans previously charged off ......... 90 65
------ ------
Net charge-offs..................................... (52) (316)
Provision charged to expense.......................... 2,485 110
------ -------
Balance at June 30 ...................................... $7,142 $4,796
====== ======
Net charge-offs as a percentage of average portfolio
loans outstanding .................................. .01% .11%
Allowance for loan losses as a percentage of total
portfolio loans outstanding at period-end........... .75 .77
Allowance for loan losses as a percentage of
non-performing loans............................... 99.04 130.80
Off-Balance Sheet Instruments
Unused commitments to extend credit totaled $397.3 million for residential
real estate loans and $103.3 million for commercial real estate loans at June
30, 1997.
At June 30, 1997, the Company had outstanding $229.8 million of commitments
to fund residential real estate loan applications with agreed-upon rates,
including $40.6 million of residential portfolio loans. Agreeing to fund
residential real estate loan applications at specified rates and holding
residential mortgage loans for sale to the secondary market exposes the
Company to interest rate risk during the period before the loans are sold to
investors. To minimize this exposure to interest rate risk, the Company
enters into firm commitments to sell such mortgage loans at specified future
dates to various third parties. At June 30, 1997, the Company had outstanding
mandatory forward commitments to sell $502.8 million of residential mortgage
loans, of which $348.9 million covered mortgage loans held for sale and
$153.9 million covered commitments to fund residential real estate loan
applications with agreed-upon rates. These outstanding forward commitments to
sell mortgage loans are expected to settle in the third quarter of 1997
without producing any material gains or losses.
15
LIABILITIES.
Total liabilities were $1.55 billion, an increase of $180.9 million from
$1.37 billion at December 31, 1996, reflecting increases in FHLB advances and
deposits, which were partially offset by declines in short-term borrowings
and long-term debt.
Deposits
As discussed earlier, in May 1997 the Company completed the sale of four
southern Michigan branches of Republic Bank which had deposits of $52 million.
Net of this sale of branch deposits, total deposits increased $35.5 million,
or 3%, since year-end 1996 to $1.05 billion at June 30, 1997.
Noninterest-bearing deposits rose $12.3 million, or 10%, to $139.2 million
from $126.9 million at year-end 1996. Interest-bearing deposits grew $23.2
million, or 3%, since year-end 1996 to $910.0 million at June 30, 1997, as
consumers responded to special promotions on savings accounts and
certificates of deposit.
Short-Term Borrowings
Short-term borrowings with maturities of less than one year, along with the
related average balances and interest rates for the six months ended June 30,
1997 and the year ended December 31, 1996, were as follows:
June 30, 1997 December 31, 1996
------------- -----------------
Average Average
Ending Average Rate During Ending Average Rate During
(Dollars in thousands) Balance Balance Period Balance Balance Period
- ----------------------------------------------------------------------------------------------------------------------------
Federal funds purchased..................... $ 70,900 $ 30,434 5.88% $ 67,900 $ 25,312 5.71%
Securities sold under agreements
to repurchase............................ 89,888 64,904 5.56 47,256 122,298 5.67
Other short-term borrowings................. 6,649 10,937 7.12 5,986 27,124 7.17
-------- -------- ---- -------- -------- ----
Total short-term borrowings.............. $167,437 $106,275 5.82% $121,142 $174,734 5.91%
======== ======== ==== ======== ======== ====
At June 30, 1997, other short-term borrowings consisted of $5.5 million in
treasury, tax and loan demand notes (TT&L) and $1.1 million in borrowings
outstanding under a revolving credit agreement with an unaffiliated financial
institution. At December 31, 1996, other short-term borrowings were comprised
of $4.0 million in TT&Ls, $1.9 million in borrowings outstanding under the
revolving credit agreement and the current portion of long-term debt.
FHLB Advances
Republic Bank and Republic Savings Bank routinely borrow short- and long-term
advances from the Federal Home Loan Bank (FHLB) to provide liquidity for
mortgage loan originations and to minimize the interest rate risk associated
with certain fixed rate commercial and residential mortgage portfolio loans.
These advances are generally secured under a blanket security agreement by
first mortgage loans or investment securities with an aggregate book value
equal to at least 150% of the advances.
FHLB advances outstanding at June 30, 1997 and December 31, 1996, were as
follows:
June 30, 1997 December 31, 1996
------------------------ --------------------
Average Average
Ending Rate At Ending Rate At
(Dollars in thousands) Balance Period-End Balance Period-End
- ------------------------------------------------------------------------------------------------
Short-term FHLB advances............... $115,483 6.15% $ 39,000 5.73%
Long-term FHLB advances................. 117,632 5.85 95,200 6.02
-------- ---- -------- ----
Total.............................. $233,115 6.00% $134,200 5.89%
======== ==== ======== ====
The long-term FHLB advances have original maturities ranging from July 1997
to May 2002.
16
Long-Term Debt
Obligations with original maturities of more than one year consisted of the
following:
June 30, December 31,
(Dollars in thousands) 1997 1996
- ----------------------------------------------------------------------------
7.17% Senior Debentures due 2001............... $25,000 $25,000
6.75% Senior Debentures due 2001............... 9,000 9,000
6.95% Senior Debentures due 2003............... 13,500 13,500
6.99% Mortgage Loan due 2000................... -- 1,792
------- -------
47,500 49,292
Less current maturities included in other
short-term borrowings...................... -- (103)
------- -------
Total long-term debt...................... $47,500 $49,189
======= =======
CAPITAL
Shareholders' equity was $122.2 million at June 30, 1997, compared to $121.8
million at December 31, 1996. This increase resulted as a $5.3 million
increase in the amount of earnings retained by the Company since year-end
1996 and an $882,000 decrease in net unrealized losses on securities
available for sale were partially offset by the repurchase of 569,000 shares
of the Company's common stock.
The Company is subject to regulatory capital requirements administered by
federal banking agencies. Failure to meet minimum capital requirements can
initiate actions by regulators that, if undertaken, could have an effect on
the Company's financial statements. Capital adequacy guidelines require
minimum capital ratios of 8.00% for Total risk-based capital, 4.00% for Tier
1 risk-based capital and 3.00% for Tier 1 leverage. To be considered
well-capitalized under the regulatory framework for prompt corrective action,
minimum capital ratios of 10.00% for Total risk-based capital, 6.00% for Tier
1 risk-based capital and 5.00% for Tier 1 leverage must be maintained.
As of June 30, 1997, the Company met all capital adequacy requirements to
which it is subject and management does not anticipate any difficulty in
meeting these requirements on an ongoing basis. The Company's capital ratios
were as follows:
June 30, December 31,
1997 1996
-------- ------------
Total capital to risk-weighted assets (1)............. 12.16% 13.84%
Tier 1 capital to risk-weighted assets (1)............ 11.45 13.30
Tier 1 capital to average assets (1).................. 7.55 8.16
<FN>
(1) As defined by the regulations.
As of June 30, 1997, the Company's Total risk-based capital was $122.8
million and Tier 1 risk-based capital was $115.6 million, an excess of $21.9
million and $55.1 million, respectively, over the minimum guidelines
prescribed by regulatory agencies for a well-capitalized institution. In
addition, Republic Bank and Republic Savings Bank had regulatory capital
ratios in excess of the minimum levels established for well-capitalized
institutions.
17
Accounting Developments
In June 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 131, Disclosures about
Segments of an Enterprise and Related Informaton, which supersedes current
accounting literature regarding segment reporting. According to the
Statement's new "management approach" to segment reporting, companies would
report financial and descriptive information about their operating segments
in both annual financial statements and interim financial reports. Operating
segments are revenue-producing components of the enterprise for which
separate financial information is produced internally and are subject to
evaluation by the chief operating decision maker in deciding how to allocate
resources to segments. SFAS No. 131 is effective for financial statements for
fiscal years beginning after December 15, 1997, with early adoption
encouraged. The Statement is not expected to significantly alter the nature
of the Company's segment disclosures in its annual report; however, the
Company's segment disclosures in Form 10-Q's filed with the Securities and
Exchange Commissions in 1998 will be expanded to encompass the required
financial information.
In June 1997, the FASB issued SFAS No. 130, Reporting Comprehensive Income,
which establishes standards for the reporting and display of comprehensive
income and its components in a full set of general purpose financial
statements. Comprehensive income is defined as the change in equity of a
business enterprise during a period from transactons and other events and
circumstances, except those resulting from investments by owners and
distributions to owners. Net income plus other comprehensive income (e.g.,
unrealized holding gains and losses on available-for-sale securities)
represent the total of all components of comprehensive income. SFAS No. 130
is effective for fiscal years beginning after December 15, 1997, with earlier
application permitted. The Company expects that adoption of this Statement
will result in expanded disclosures in the consolidated statement of changes
in shareholders' equity.
In February 1997, the FASB issued SFAS No. 129, Disclosure of Information
about Capital Structure, which consolidates existing accounting guidance
relating to a company's capital structure and is effective for financial
statements for period ending after December 15, 1997. Adoption of the
Statement is not expected to have any impact on the Company's disclosures
about its financial position, results of operations, liquidity or capital
position.
In February 1997, the FASB issued SFAS No. 128, Earnings Per Share, which
simplifies the calculation of earnings per share (EPS). Under SFAS No. 128,
primary EPS currently computed in accordance with APB Opinion No. 15 will be
replaced with a new simpler calculation called basic EPS. Basic EPS will be
calculated by dividing income available to common shareholders by the
weighted average common shares outstanding. Thus, options, warrants and other
common stock equivalents will be excluded from the calculation. Fully diluted
EPS will not change significantly but has been renamed diluted EPS. SFAS No.
128 is effective for both interim and annual financial statements for periods
ending after December 15, 1997, with earlier application prohibited. The
impact of SFAS No. 128 will result in a $0.01 increase in the Company's
primary earnings per share for each of the second quarters ended June 30,
1997 and 1996.
On January 1, 1997, the Company adopted the provisions of SFAS No. 125,
Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities, issued by the FASB in June 1996, pertaining
to sales, securitizations and servicing of receivables and other financial
assets and the extinguishment of liabilities without material impact to
financial position and results of operations. The effective date for
provisions of the Statement relating to repurchase agreements, securities
lending and other similar transactions and pledged collateral was delayed
until after December 31, 1997 through the issuance by the FASB of SFAS No.
127, Deferral of the Effective Date of Certain Provisions of FASB Statement
No. 125, an amendment to FASB Statement No. 125. The adoption of SFAS No. 127
is not expected to have a material impact on the Company's financial position
and results of operations.
18
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In the ordinary course of business, the Company and its
subsidiaries are parties to certain routine litigation. In the
opinion of management, the aggregate liabilities, if any,
arising from such legal proceedings would not have a material
adverse effect on the Company's consolidated financial
position, results of operations and liquidity.
Item 2. Changes in Securities
On May 22, 1997, the Board of Directors declared a quarterly
cash dividend of $0.10 per share of common stock, payable on
July 3, 1997 to shareholders of record June 6, 1997.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(3)(i) Articles of Incorporation
(11) Statement Re: Computation of Per Share Earnings
(27) Financial Data Schedule
(b) Reports on Form 8-K
During the second quarter of 1997, the Company filed a Form
8-K dated June 20, 1997, amended by Form 8-K/A dated July
3, 1997, relating to the dismissal of Deloitte & Touche LLP
and the appointment of Ernst & Young LLP as the
registrant's certifying accountants. The filing stated
there were no disagreements with Deloitte & Touche LLP
regarding accounting principles or practices, financial
statement disclosures, or auditing scope and procedures in
connection with their audits and included a letter from
Deloitte & Touche LLP expressing their agreement with that
statement.
19
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
REPUBLIC BANCORP INC.
(Registrant)
Date: August 14, 1997 BY: /s/ Thomas F. Menacher
-------------------------------------
Thomas F. Menacher
Senior Vice President, Treasurer and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
20
EXHIBIT INDEX
Sequential
Exhibit Number Exhibit Page Number
3(i) Articles of Incorporation 22 - 48
11 Statement Re: Computation of
Earnings Per Share 49
27 Financial Data Schedule 50
21