SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 11-K
Annual Report Pursuant to Section 15(d)
of the Securities Exchange Act of 1934
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( X ) Annual report pursuant to Section 15(d)
of the Securities Exchange Act of 1934.
For the fiscal year ended December 31, 1997.
OR
( ) Transition report pursuant to Section 15(d)
of the Securities Exchange Act of 1934.
For the transition period
from _________________ to
________________.
Commission file number of the issuer: 0-15734
REPUBLIC BANCORP INC.
TAX-DEFERRED SAVINGS PLAN AND TRUST
(Full title of plan)
REPUBLIC BANCORP INC.
1070 East Main Street
Owosso, Michigan 48867
(Name of the issuer and address of
its principal executive office)
REQUIRED INFORMATION
Items 1-3. Financial Statements
Not Applicable.
Item 4. ERISA Financial Statements
The attached financial statements and schedules, which are
hereby incorporated by reference by the Republic Bancorp
Inc. Tax-Deferred Savings Plan and Trust (the "Plan"),
have been prepared in accordance with the financial
reporting requirements of ERISA:
Financial Statements for the years ended December
31, 1997 and 1996, Supplemental Schedules for the
year ended December 31, 1997, Independent
Auditors' Report dated June 12, 1998, and
Independent Auditors' Report dated June 9, 1997.
Attached as Exhibit 23(a) and Exhibit 23(b) are written
consents of independent auditors, Ernst & Young LLP and
Deloitte & Touche LLP, respectively.
REPUBLIC BANCORP INC.
TAX DEFERRED SAVINGS PLAN
Financial Statements for the
Years Ended December 31, 1997 and 1996,
Supplemental Schedules for the
Year Ended December 31, 1997 and
Independent Auditors' Reports
REPUBLIC BANCORP INC.
TAX DEFERRED SAVINGS PLAN
TABLE OF CONTENTS
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Page Number
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Independent Auditors' Reports 1 - 2
Financial Statements for the Years Ended December 31,
1997 and 1996:
Statements of Net Assets Available for Benefits 3
Statements of Changes in Net Assets Available for Benefits 4
Notes to Financial Statements 5 - 11
Signatures 12
Supplemental Schedules for the Year Ended December 31, 1997:
Item 27a - Schedule of Assets Held for Investment
Purposes 13
Item 27b - Schedule of Loans or Fixed Income Not Applicable
Item 27c - Schedule of Leases in Default or
Classified as Uncollectible Not Applicable
Item 27d - Schedule of Reportable Transactions 14
Items 27e and 27f - Schedule of Non-Exempt
Transactions Not Applicable
Report of Independent Auditors
To the Trustees and Participants of
Republic Bancorp Inc. Tax-Deferred Savings Plan and Trust
Owosso, Michigan
We have audited the accompanying statement of net assets available for
benefits of Republic Bancorp Inc. Tax-Deferred Savings Plan and Trust as of
December 31, 1997, and the related statement of changes in net assets
available for benefits for the year then ended. These financial statements
are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audit. The
financial statements of Republic Bancorp Inc. Tax-Deferred Savings Plan and
Trust for the year ended December 31, 1996 were audited by other auditors
whose report dated June 9, 1997 expressed an unqualified opinion on those
statements.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the 1997 financial statements referred to above present
fairly, in all material respects, the net assets available for benefits of
the Plan at December 31, 1997, and the changes in its net assets available
for benefits for the year then ended, in conformity with generally accepted
accounting principles.
Our audit was made for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental Schedule of Assets
Held for Investment as of December 31, 1997 and Schedule of Reportable
Transactions for the year then ended are presented for purposes of complying
with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974, and are
not a required part of the financial statements. The supplemental schedules
have been subjected to the auditing procedures applied in our audit of the
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the financial statements taken as a whole.
/s/ Ernst & Young LLP
June 12, 1998
Detroit, Michigan
INDEPENDENT AUDITORS' REPORT
To the Trustees and Participants of
Republic Bancorp Inc. Tax Deferred Savings Plan and Trust
Owosso, Michigan
We have audited the accompanying statement of net assets available for
benefits of Republic Bancorp Inc. Tax Deferred Savings Plan and Trust (the
"Plan") as of December 31, 1996 and the related statement of changes in net
assets available for benefits for the year then ended. These financial
statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan at December 31,
1996, and the changes in net assets available for benefits for the year then
ended in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
June 9, 1997
Detroit, Michigan
REPUBLIC BANCORP INC. TAX-DEFERRED SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31,
1997 1996
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ASSETS
Investments, at fair value (Notes 2 and 4):
Cash and Cash Equivalents $ 61,597 $ 23,318
Common Stock:
Republic Bancorp Inc. Common Stock
(670,164 and 569,753 shares at 12/31/97
and 12/31/96, respectively) 14,424,061 6,096,667
Stock Mutual Funds 7,879,410 4,655,573
Bond and Investment Contract Funds 3,022,781 2,405,617
Loans to Participants 474,823 364,417
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Total Investments 25,862,672 13,545,592
Receivables:
Participants' contributions 5,923 74,392
Employer's contribution 13,995 29,456
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Total Receivables 19,918 103,848
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Assets Available for Benefits $25,882,590 $13,649,440
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<FN>
See notes to financial statements.
-3-
REPUBLIC BANCORP INC. TAX-DEFERRED SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31,
1997 1996
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Assets Available for Benefits, January 1, $13,649,440 $ 9,244,046
Additions:
Participant contributions 3,244,778 2,817,552
Employer contributions, net of forfeitures 1,165,495 630,415
Dividends on Republic Bancorp Inc. stock 235,134 185,501
Dividends and interest income on investments
in stock mutual funds, bond funds
investment contract funds and loan fund 244,269 136,024
Net appreciation in fair value of Republic
Bancorp Inc. stock 6,850,237 878,697
Net appreciation in fair value of investments
in stock mutual funds, bond funds and
investment contract funds 1,589,638 544,685
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Total additions 13,329,551 5,192,874
Deductions:
Benefits paid to participants (1,092,778) (785,080)
Administrative loan fees (3,623) (2,400)
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Total deductions (1,096,401) (787,480)
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Net Increase 12,233,150 4,405,394
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Assets Available for Benefits, December 31, $25,882,590 $13,649,440
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<FN>
See notes to financial statements.
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REPUBLIC BANCORP INC.
TAX-DEFERRED SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
1. PLAN DESCRIPTION
The following description of the Republic Bancorp Inc. Tax-Deferred
Savings Plan (the "Plan") provides only general information.
Participants should refer to the Plan document for a more complete
description of the Plan's provisions. The Plan was established
November 1, 1988 under the provisions of Section 401(k) of the
Internal Revenue Code and is a voluntary savings plan for eligible
employees of Republic Bancorp Inc. (the "Company"). It is subject
to the provisions of The Employment Retirement Income Security Act
of 1974 (ERISA).
All employees of the Company are eligible to participate in the
Plan after completing one year of continuous service. As of
December 31, 1997 and 1996, there were 1,152 and 913 plan
participants, respectively.
Participant contributions are limited to 15% of the participant's
compensation as defined in the Plan, or such maximum rates as may
be approved by the Internal Revenue Service. The Company
contributes an amount equal to 50% of each participant's elective
deferrals for the Plan year up to 7% of the participant's annual
compensation. The Company's contributions to the Plan are made to
the Republic Stock Fund. The Company's contributions are vested 25%
after two years of service and an additional 25% each year
thereafter.
If a nonvested participant is terminated from the Plan, the
participant will forfeit a portion of his account related to
employer contributions. Such forfeitures are applied as a reduction
to required employer contributions. As of December 31, 1997 and
1996, the amount of forfeited nonvested accounts totaled $54,410
and $35,505, respectively. These amounts are used to reduce
employer contributions for the subsequent Plan year.
Each participant's account is credited with the participant's
contribution and an allocation of The Company's contribution and
Plan earnings. Allocations are based upon the participant's account
balances. Expenses of operating the Plan are paid by The Company,
with the exception of administrative loan fees which are paid by
Plan participants.
Although it has not expressed any interest to do so, the Company
has the right to terminate the Plan subject to the provisions of
ERISA. Such termination of the Plan, if any, would not affect an
employee's interest in assets already in the Plan and any employer
contributions not yet vested would become fully vested.
Firstar Trust Company as trustee for the Plan, provides
participants with the following four investment options:
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1. PLAN DESCRIPTION (Continued)
The Firstar Trust Company Stable Asset Portfolio (Firstar
Stable Asset Fund) invests in a well-diversified portfolio
of investment contracts issued by highly rated insurance
companies, other stable assets such as U.S. Treasury
bills, and cash or cash equivalents. The current average
maturity of investments in the Fund is 1.8 years.
The Firstar Bond IMMDEX Fund (Bond IMMDEX Fund) invests in
U.S. Government bonds and investment-grade rated corporate
bonds which have intermediate and longer maturity dates.
The Fund attempts to match the performance of the Lehman
Brothers Government/Corporate Bond Index. The current
average maturity of investments in the Fund is 10.6 years.
The Vanguard/Windsor II Fund is a growth and income stock
fund that invests in the equity securities of large and
medium-size companies whose stocks are considered to be
undervalued by the Fund's advisers.
The American Century-Twentieth Century Ultra Fund
(Twentieth Century Ultra Fund) is an equity fund that
invests in the common stocks of medium-to-large-size
companies whose stocks are considered by fund management
to have better-than average prospects for appreciation.
Effective July 23, 1997, the following two additional investment
options were made available to participants of the Plan through
Firstar Trust Company:
The Firstar Equity Index Fund invests in the stocks of
well-known U.S. Companies in proportion to the industries
and company sizes represented by the Standard & Poor's
(S&P) 500 Index, which is an unmanaged index of the stocks
of 500 well-known U.S. companies. The Fund attempts to
match the performance of the S&P 500 Index.
The Firstar Balanced Growth Fund is a growth and income
stock fund that invests in stocks, bonds and money market
instruments. It invests in medium-to-large-size companies
whose stocks are considered by fund management to have the
potential to rise in the future and in investment-grade
quality bonds, such as U.S. government bonds and corporate
bonds, which are considered by the Fund's advisors to
provide immediate investment income through regular
interest payments.
Throughout the plan years ended December 31, 1997 and 1996,
participants were also given the option to invest in the Republic
Bancorp Inc. Common Stock Fund (Republic Stock Fund), which invests
100% in the common stock of Republic Bancorp Inc.
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1. PLAN DESCRIPTION (Continued)
The following four investment options were available to December
23, 1997 to the participants of the Premier Bancorporation, Inc.
401(k) Plan prior to its merger with the Plan effective January 1,
1993:
The Equitable Aggressive Fund invests in securities of
smaller-sized companies (with capitalizations generally
between $90 million to $1.5 billion) perceived to have
greater growth potential than large companies.
The Equitable Balanced Fund invests in common stocks,
other equity type instruments, longer-term fixed income
securities, publicly traded debt securities and short-term
money market instruments.
The Equitable Common Stock Fund invests in common stocks
and other equity securities issued by intermediate and
large sized companies with an investment objective of
long-term capital growth and increasing income.
The Equitable Fixed Income Fund invests primarily in
Guaranteed Investment Contracts issued by high quality
insurance companies.
Effective December 23, 1997, participant balances in these funds
were transferred to the Firstar Stable Asset Fund, the Bond IMMDEX
Fund, the Vanguard/Windsor II Fund, the Twentieth Century Ultra
Fund and the Republic Stock Fund discussed above.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of additions and deductions
during the reporting period. Actual results could differ from those
estimates.
Investment Valuation and Income Recognition: The accompanying
financial statements reflect the accrual basis of accounting.
Investments are stated at fair value which is generally based on
quoted prices on the last business day of the Plan year. Loans to
participants are recorded at cost which approximates fair value.
Terminated Participants: As of December 31, 1997 and 1996, account
balances of participants who have terminated employment with the
Plan's sponsor totaled $1,478,133 and $912,502, respectively. Of
these amounts, $221,568 and $44,374, respectively, represented
benefits due to persons who have elected to withdraw from
participation in the Plan.
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3. INVESTMENTS
The following table represents the fair values of investments.
Investments that represent 5% or more of the Plan's net assets
available for benefits are separately identified with an asterisk.
December 31,
1997 1996
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Cash and Cash Equivalents:
Portico Institutional Money Market Fund $ 61,597 $ 23,318
Common Stock:
Republic Bancorp Inc. 14,357,586* 6,045,436*
Accrued Dividend Income 66,475 51,231
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14,424,061 6,096,667
Stock Mutual Funds:
Vanguard/Windsor II Fund 4,459,031* 2,523,429*
Twentieth Century Ultra Fund 3,345,890* 1,881,676*
Firstar Equity Index Fund 58,645 --
Firstar Balanced Growth Fund 15,844 --
Equitable Aggressive Fund -- 127,284
Equitable Balanced Fund -- 25,801
Equitable Common Stock Fund -- 97,383
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7,879,410 4,655,573
Bond and Investment Contract Funds:
Firstar Stable Asset Fund 2,240,049* 1,694,057*
Firstar Bond IMMDEX Fund 782,732* 538,502*
Equitable Fixed Income Fund -- 173,058
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3,022,781 2,405,617
Loans to Participants 474,823 364,417
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Total Investments $25,862,672 $13,545,592
=========== ===========
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4. FUND INFORMATION
Contributions, investment income, and distributions to participants
by fund are as follows for the years ended December 31, 1997 and
1996.
Contributions:
1997 1996
---- ----
Common Stock:
Republic Bancorp Inc. $1,712,643 $1,169,862
Stock Mutual Funds:
Vanguard/Windsor II Fund 1,127,001 836,314
Twentieth Century Ultra Fund 962,068 845,093
Firstar Equity Index Fund 13,715 --
Firstar Balanced Growth Fund 6,507 --
Bond Funds and Investment Contact Funds:
Firstar Stable Asset Fund 364,369 400,108
Firstar Bond IMMDEX Fund 223,970 196,590
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Total Contributions $4,410,273 $3,447,967
========== ==========
Investment Income:
1997 1996
---- ----
Cash and Cash Equivalents:
Portico Institutional Money Market Fund $ 2,044 $ 1,274
Common Stock:
Republic Bancorp Inc. 7,085,371 1,062,924
Stock Mutual Funds:
Vanguard/Windsor II Fund 961,508 419,189
Twentieth Century Ultra Fund 615,043 106,683
Equitable Aggressive Fund 10,157 16,046
Equitable Balanced Fund 2,193 2,736
Equitable Common Stock Fund 22,221 12,537
Firstar Equity Index Fund 2,292 --
Firstar Balanced Growth Fund 378 --
Bond Funds and Investment Contract Funds:
Firstar Stable Asset Fund 111,940 90,093
Firstar Bond IMMDEX Fund 61,204 18,415
Equitable Fixed Income Fund 8,233 11,154
Loan Fund 36,694 3,856
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Total Investment Income $8,919,278 $1,744,907
========== ==========
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4. FUND INFORMATION (Continued)
Benefits Paid to Participants:
1997 1996
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Cash and Cash Equivalents:
Portico Institutional Money Market Fund $ 232 $ 621
Common Stock:
Republic Bancorp Inc. 461,987 363,298
Stock Mutual Funds:
Vanguard/Windsor II Fund 272,644 113,952
Twentieth Century Ultra Fund 197,134 106,860
Bond Funds and Investment Contract Funds:
Firstar Stable Asset Fund 105,875 126,387
Firstar Bond IMMDEX Fund 41,871 28,287
Equitable Fixed Income Fund 2,367 41,175
Loan Fund 10,668 4,500
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Total Benefits Paid to Participants $1,092,778 $ 785,080
========== ==========
5. TAX STATUS
The Plan has received an opinion letter from the Internal Revenue
Service dated December 28, 1992, stating that that the written form
of the underlying prototype plan document is qualified under
Section 401(a) of the Internal Revenue Code (the "Code"), and that
any employee adopting this form of the plan will be considered to
have a plan qualified under Section 401(a) of the Code. Therfore,
the related trust is exempt from taxation. Once qualified, the plan
is required to operate in conformity with the Code to maintain its
qualification. The plan administrator is not aware of any course of
action or series of events that it believes would adversely affect
the plan's qualified status.
6. YEAR 2000 ISSUE (Unaudited)
The Year 2000 issue is the result of computer programs being
written using two digits rather than four to define the applicable
year. Any of the Company's computer programs that have
time-sensitive software may recognize a date using "00" as the year
1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process
transactions, send invoices, or engage in similar normal business
activities.
The Company initiated the process of preparing its computer systems
and applications for the year 2000 in June 1997. A Year 2000
Compliance Plan has been developed by management and reviewed by
the Company's Board of Directors. This Plan contains requirements
for assessing the impact of the Year 2000 on critical computer
systems and applications and for modifying, replacing and testing
certain hardware and software maintained by the Company so that its
computer systems will function properly with respect to dates in
the year 2000 and thereafter.
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6. YEAR 2000 ISSUE (Continued)
Management believes that with modifications to existing software
and conversions to new software, the Year 2000 will not pose
significant operational problems for its computer systems. However,
if such modifications and conversions are not made or are not
completed on a timely basis, the Year 2000 could have a material
impact on the operations of the Company. The Company has also
initiated formal communications with its significant suppliers and
service providers, such as Firstar Trust Company, and large
customers as well as other financial institutions to determine the
extent to which the Company's interface systems are vulnerable to
those third parties' failure to remediate their own Year 2000
issues. There is no guarantee that the systems of other companies
on which the Company's systems rely will be converted on a timely
basis and would not have an adverse effect on the Company's
systems.
The Company will utilize both internal and external resources to
reprogram, or replace, and test the software for Year 2000
modifications. The total Year 2000 project cost for the Company is
not expected to have a material effect on the Company's results of
operations, financial position, liquidity or capital resources. The
project is expected to be completed not later than June 30, 1999,
which is prior to any anticipated impact on the Company's operating
systems. The cost of the project and the expected completion date
are based on management's best estimates.
* * * * * * * *
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
REPUBLIC BANCORP INC.
TAX-DEFERRED SAVINGS
PLAN AND TRUST
REPUBLIC BANCORP INC.
Plan Administrator
Date: June 29, 1998 By: /s/ Travis D. Jones
_________________________
Travis D. Jones, as Agent
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Republic Bancorp Inc. Tax-Deferred Savings Plan
Employer ID #38-2604669
Plan #001
Item 27a - Schedule of Assets Held for Investment Purposes
December 31, 1997
Units/ Fair
Description Shares Cost Value
- ----------- ------ ---- -----
* Portico Institutional Money Market Fund 61,597 $ 61,597 $ 61,597
* Firstar Stable Asset Fund 95,953 2,054,757 2,240,049
* Firstar Bond IMMDEX Fund 27,663 761,444 782,732
* Vanguard/Windsor II Fund 154,037 3,699,414 4,459,031
* Twentieth Century Ultra Fund 121,405 3,464,544 3,345,890
* Republic Bancorp Inc. Common Stock 670,164 3,930,806 14,424,061
* Firstar Equity Index Fund 891 57,615 58,645
* Firstar Balanced Growth Fund 608 17,602 15,844
* Loans to 99 participants against their
individual account balances (with
interest rates ranging from 7.1% to
11.25% and maturing through June 2007) 474,823 474,823 474,823
----------- -----------
Total $14,522,602 $25,862,672
=========== ===========
<FN>
* Party in interest
There were no investment assets reportable as acquired and disposed of during
the year.
- 13 -
Republic Bancorp Inc. Tax-Deferred Savings Plan
Employer ID #38-2604669
Plan #001
Item 27d - Schedule of Reportable Transactions
Year Ended December 31, 1997
Number Number
of Units of Units Purchase Selling Net Realized
Purchased Sold Asset Description Price Price Gain/(Loss)
- ---------- -------- ----------------- -------- ------- ------------
Series of Transactions:
2,520,747 2,486,984 Portico Institutional $2,520,747 $2,486,984 $ --
Money Market Fund
39,803 20,450 Firstar Stable Asset $ 904,405 $ 463,540 $ 12,240
Fund
73,546 24,960 Vanguard/Windsor II $2,019,869 $ 701,831 $ 91,507
Fund
63,713 14,021 Twentieth Century $1,901,263 $ 444,492 $ 51,324
Ultra Fund
160,465 64,791 Republic Bancorp Inc. $2,378,409 $ 950,884 $188,192
Common Stock
Single Transaction: None
The purchase and selling prices reported above represent the fair values of
the assets on the transaction dates.
- 14 -
EXHIBIT INDEX
Page
Exhibit Number
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23(a) Consent of Ernst & Young LLP 16
23(b) Consent of Deloitte & Touche LLP 17
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