CONFORMED COPY
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1995
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REPUBLIC BANCORP INC.
(Exact name of registrant as specified in its charter)
Commission File Number 0-15734
Michigan 38-2604669
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1070 East Main Street, Owosso, Michigan 48867
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (517) 725-7337
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $5.00 par value
(Title of Class)
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, and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- ------
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
Aggregate market value of the voting stock (which consists solely of
shares of Common Stock) held by non-affiliates of the registrant as of
February 29, 1996, based on the last reported sale price on that date of
$11.875 of the registrant's Common Stock outstanding: $194.2 million.
Number of shares of the registrant's Common Stock outstanding as of
February 29, 1996: 16,352,119
DOCUMENTS INCORPORATED BY REFERENCE
PART II: Certain portions of the registrant's Annual Report to
Shareholders for the fiscal year ended December 31, 1995.
PART III: Certain portions of the registrant's definitive Proxy Statement
in connection with the Annual Meeting of Shareholders of the
registrant to be held on April 24, 1996.
PART I
Item 1. BUSINESS
General
Republic Bancorp Inc. (the "Company") is a bank holding company headquartered
in Ann Arbor, Michigan which offers retail, commercial and mortgage banking
services through its bank subsidiary, Republic Bank, and its savings bank
subsidiary, Republic Savings Bank ("Republic Savings"), and mortgage banking
services through its non-depository mortgage banking subsidiaries, Republic
Bancorp Mortgage Inc. ("Republic Mortgage"), Market Street Mortgage
Corporation ("Market Street") and CUB Funding Corporation ("CUB Funding"). The
Company's mortgage banking services include the origination or purchase,
short-term funding, sale and servicing of residential first mortgage loans,
and the purchase and sale of servicing rights associated with such loans.
At December 31, 1995, the Company had consolidated total assets of $1.5
billion, total deposits of $905 million and shareholders' equity of $126
million. For the year ended December 31, 1995, the Company reported net income
of $14.3 million versus $15.7 million for 1994 and originated or purchased
$2.8 billion of residential mortgage loans, a slight increase over the prior
year. At December 31, 1995, the Company had a mortgage loan servicing
portfolio of $4.0 billion.
The Company's current operating strategy is to grow its mortgage banking fee
income and related interest income while managing its liquidity needs and the
interest rate risks of its balance sheet. The Company's mortgage banking
operations earn origination and loan servicing fees and typically sell their
mortgage loan originations into the secondary market. Between the time the
Company funds its mortgage loans and their delivery into the secondary market,
the mortgage loans are held for sale. The Company can thereby, in effect, earn
long-term interest rates on short-term investments while minimizing interest
rate risk. Consistent with a strategy of managing interest rate risk, the
Company typically securitizes and sells all short-term and long-term
fixed-rate mortgages and retains a portion of variable rate mortgages. The
growth of the Company's residential mortgage origination business has been
funded primarily with Republic Bank's and Republic Savings' retail deposits
and short-term borrowings, and the mortgage subsidiaries' warehousing lines of
credit.
3
Mortgage Banking
The Company originates residential mortgage loans through 96 retail offices
located in Michigan, Alabama, Arizona, California, Colorado, Connecticut,
Florida, Georgia, Idaho, Illinois, Indiana, Maryland, Massachusetts, Nevada,
New York, North Carolina, Ohio, Oregon, Virginia and Washington, and through
its wholesale operations. The Company's wholesale operations are conducted
from 10 offices (one each in Arizona, Idaho, Nevada, Oregon and Washington,
and five in California), and involve the purchase of residential loans from
approximately 200 participating correspondent institutions and brokers.
Each retail office is responsible for processing loan applications and
preparing loan documentation. Residential loans purchased through the
wholesale operation are processed and prepared by the correspondent
institutions and brokers. Quality control personnel then review loans to be
purchased through the wholesale operation using certain verification
procedures. Loan applications are then evaluated by the underwriting
departments of either the Company's mortgage or banking subsidiaries for
compliance with the Company's underwriting criteria, including loan to value
ratios, borrower qualifications and required insurance.
The substantial majority of the loans are conventional mortgage loans which
are secured by residential properties and comply with the requirements for
sale to, or conversion to mortgage-backed securities issued by, the Federal
National Mortgage Association ("FNMA") or the Federal Home Loan Mortgage
Corporation ("FHLMC"). The Company also originates Federal Housing
Administration ("FHA") insured and Department of Veterans Affairs ("VA")
guaranteed mortgage loans for sale in the form of modified pass-through
mortgage-backed securities guaranteed by the Government National Mortgage
Association ("GNMA").
The residential loans originated or purchased by the Company are funded by
either: (1) Republic Bank or Republic Savings retail deposits or short-term
funding sources such as Federal Home Loan Bank ("FHLB") advances or reverse
repurchase agreements; or (2) Republic Mortgage, Market Street and CUB Funding
through borrowings under various warehousing lines of credit and revolving
repurchase agreements. While some variable rate residential loans may be
retained by Republic Bank and Republic Savings, the majority of all
residential loans are held for a short period of time (generally less than 60
days) and are then sold to secondary market investors either directly or by
pooling them and selling the resulting mortgage-backed securities. Such
residential loans and mortgage-backed securities are sold without recourse to
the Company in the event of default by the borrowers. To minimize any interest
rate risk, the Company typically enters into commitments to sell forward
mortgage-backed securities to investors at the time the customer agrees upon
an interest rate.
4
When the Company sells the residential loans it has originated or purchased,
it may either retain or sell the rights to service those loans and to receive
the related fees. While there is an active market for selling servicing rights
(which are generally valued in relation to the present value of the
anticipated cash flow generated by the servicing rights), the aggregation of a
servicing portfolio can also create a substantial continuing source of income.
Republic Mortgage, Market Street and CUB Funding receive servicing fees
ranging generally from 25 to 45 basis points (of the mortgage amount) per
annum on their respective servicing portfolios.
Commercial and Retail Banking
The Company's bank subsidiary, Republic Bank, is a Michigan chartered bank
which engages in the business of commercial banking and exercises the powers
of a full service commercial bank. See "Regulation." Republic Bank operates in
six distinct market areas in Michigan. At December 31, 1995, the subsidiary
bank had assets of $833 million, deposits of $672 million, and 25 offices.
The Company's savings bank subsidiary, Republic Savings Bank, is an Ohio
chartered savings bank which engages in the business and exercises the powers
of a savings bank. See "Regulation." Republic Savings operates primarily in
the greater Cleveland, Ohio area and at December 31, 1995, had assets of $391
million, deposits of $236 million and 11 offices.
Republic Bank and Republic Savings offer checking, savings and time deposits,
loans to individuals, commercial enterprises and governmental agencies,
installment credit to consumers and small businesses, and other banking
services. While Republic Bank's and Republic Savings' lending activities focus
primarily on residential real estate mortgages, they also emphasize loans to
small and medium-sized businesses through the Small Business Administration
("SBA"). The Company's general policy is to originate SBA-secured loans or
real estate secured commercial loans with loan to value ratios of 70% or less.
Republic Bank and Republic Savings target that segment of the banking market
which is interested in personalized service for their deposits. The deposits
are primarily retail deposits from within their market areas. At December 31,
1995, the subsidiaries' combined interest-bearing deposits comprised 86% of
total deposits, and time deposits of $100,000 or more comprised 21% of
interest-bearing deposits.
Revenues
The principal sources of revenue for the Company are interest income and fees
on loans and mortgage banking income. On a consolidated basis, interest and
fees on loans accounted for approximately 42%, 35% and 39% of total revenues
in 1995, 1994 and 1993, respectively. Non-interest income, primarily
consisting of mortgage banking income (i.e., gain on sales of mortgage loans
and mortgage servicing rights, origination fee income and mortgage loan
servicing fees, net of amortization), gain on sale of securities, and service
charges accounted for approximately 44%, 49% and 54% of total revenues in
1995, 1994 and 1993, respectively.
5
Interest income from securities, money market investments and interest earning
deposits accounted for approximately 14%, 16% and 7% of total revenues during
1995, 1994 and 1993, respectively.
For further information, see the Company's financial statements incorporated
herein by reference.
Competition
Mortgage banking and commercial and retail banking are highly competitive
businesses, in which the Company faces numerous banking and non-banking
institutions as competitors. By reason of changes in Federal law (which became
effective on September 29, 1995) and Michigan law (which became effective on
November 29, 1995), the number of types of potential depository institution
competitors have substantially increased. See "Recently Enacted and Proposed
Legislation". Generally, financial institutions have greater resources to use
in making acquisitions and higher lending limits than those of the Company's
bank or savings bank or any banking institution that the Company could
acquire. Such institutions can perform certain functions for their customers
which the Company or its subsidiary bank or savings bank may not offer.
The principal factors in the markets for deposits and loans are price
(interest rates paid and charged) and customer service. Republic Bank and
Republic Savings compete for deposits by offering depositors a variety of
savings accounts, checking accounts, convenient office locations and other
miscellaneous services. The Company competes for loans through the efficiency
and quality of the services it provides to borrowers, real estate brokers and
home builders. The Company seeks to compete for mortgages primarily on the
basis of customer service including prompt underwriting decisions and funding
of loans and by offering a variety of loan programs as well as competitive
interest rates.
Regulation
Bank holding companies, banks and savings banks are subject to extensive
regulation under both federal and state law. To the extent the following
material describes statutory and regulatory provisions, it is qualified in its
entirety by reference to the particular statutory and regulatory provisions. A
change in applicable law or regulation could have a material effect on the
business of the Company.
1. Bank Holding Company
The Company, as a bank holding company, is regulated under the Bank
Holding Company Act of 1956, as amended ("BHC Act"), and is subject to
the supervision of the Board of Governors of the Federal Reserve
System ("Federal Reserve Board"). The Company is registered as a bank
holding company with the Federal Reserve Board and is required to file
with the Federal Reserve Board an annual report and such additional
information as the Federal Reserve Board may require pursuant to the
BHC Act. The Federal Reserve Board may also make inspections and
examinations of the Company and its subsidiaries.
6
Under the BHC Act, bank holding companies such as the Company are
prohibited, with certain limited exceptions, from engaging in
activities other than those of banking or of managing or controlling
banks and from acquiring or retaining direct or indirect ownership or
control of voting shares or assets of any company which is not a bank
or bank holding company, other than subsidiary companies furnishing
services to or performing services for its subsidiaries, and other
subsidiaries engaged in activities which the Federal Reserve Board
determines to be so closely related to banking or managing or
controlling banks as to be a proper incident thereto. Since September
29, 1995, the BHC Act has permitted the Federal Reserve Board under
specified circumstances to approve the acquisition, by a bank holding
company located in one State (such as the Company), of a bank or bank
holding company located in another State without regard to any
prohibition contained in State law. See "Recently Enacted and Proposed
Legislation."
The Company is a corporation which is separate and distinct from its
depository institutions and other subsidiaries. Most of the Company's
revenues are received by it in the form of dividends or interest paid
by its subsidiaries. There are statutory and regulatory limitations on
the timing and amount of dividends which may be paid to the Company by
it subsidiaries.
Under Federal Reserve Board policy, the Company is expected to act as
a source of financial strength to Republic Bank and Republic Savings
and to commit resources to support them. This support may be required
at times when, in the absence of such Federal Reserve Board policy,
the Company would not otherwise be required to provide it. In
addition, in certain circumstances a Michigan chartered bank having
impaired capital may be required by the Commissioner of the Michigan
Financial Institutions Bureau ("FIB") either to restore the bank's
capital by a special assessment upon its shareholders, or to initiate
the liquidation of the bank.
Any capital loans by a bank holding company to a subsidiary bank are
subordinate in right of payment to deposits and to certain other
indebtedness of such subsidiary bank. In the event of a bank holding
company's bankruptcy, any commitment by the bank holding company to a
federal bank regulatory agency to maintain the capital of a subsidiary
bank will be assumed by the bankruptcy trustee and entitled to a
priority of payment. This priority would apply to guarantees of
capital plans under the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA").
The Federal Reserve Board has adopted capital adequacy guidelines to
provide a framework for supervisory evaluation of the capital adequacy
of bank holding companies. The capital adequacy guidelines establish
minimum levels of capital, measured in several different manners
(including as a function of risk-adjusted assets) described in
detailed regulations, which must be maintained by a bank holding
company.
7
FDICIA requires the federal bank regulatory agencies biennially to
review risk-based capital standards to ensure that they adequately
address interest rate risk, concentration of credit risk and risks
from non-traditional activities and, since adoption of the Riegle
Community Development and Regulatory Improvement Act of 1994 (the
"Riegle Act"), to do so taking into account the size and activities of
depository institutions and the avoidance of undue reporting burdens.
See "Recently Enacted and Proposed Legislation." In 1995, the agencies
adopted regulations requiring as part of the assessment of an
institution's capital adequacy the consideration of (i); identified
concentrations of credit risks, (ii) the exposure of the institution
to a decline in the value of its capital due to changes in interest
rates, and (iii) the application of revised conversion factors and
netting rules on the institution's potential future exposure from
derivative transactions. In addition, the agencies proposed (i);
additional required data submissions on periodic Reports of Condition
and Income ("Call Reports") regarding interest rate exposure, to
furnish a basis for future regulations imposing explicit minimum
capital charges for interest rate risk, and (ii) incorporation in the
capital adequacy regulations of a measure for market risk in, among
other things, the trading of debt instruments.
2. Bank Subsidiaries
The Company's commercial bank subsidiary, Republic Bank, is subject to
regulation and examination primarily by the FIB. The Company's savings
bank subsidiary, Republic Savings, is subject to regulation and
examination primarily by the Ohio Superintendent of the Division of
Financial Institutions. As insured state banks, Republic Bank and
Republic Savings are also subject to regulation and examination by the
Federal Deposit Insurance Corporation ("FDIC").
These agencies and federal and state law extensively regulate various
aspects of the banking business including, among other things,
permissible types and amounts of loans, investments and other
activities, capital adequacy, branching, interest rates on loans and
on deposits, the maintenance of non-interest bearing reserves on
deposit accounts, and the safety and soundness of banking practices.
The FDIC imposes capital adequacy guidelines on Republic Bank and
Republic Savings. Subject to certain variations and exceptions, these
guidelines are generally similar to those of the Federal Reserve Board
discussed above with respect to bank holding companies.
As insured banks, Republic Bank and Republic Savings are subject to
uniform real estate lending regulations adopted by the Federal
depository institution regulatory agencies. These regulations require
each institution to adopt comprehensive and appropriate real estate
lending policies, including underwriting standards and measurable loan
to value ratios which are consistent with safe and sound banking
practice, and documentation, approval and administration standards,
all of which are reviewed and approved annually by the institution's
board of directors. The regulations provide specific guidance on loan
to value ratios which are acceptable, ranging from a maximum of 65%
for loans secured by raw land up to 85% for loans secured by 1-4
family residential construction or improved property.
8
Although no maximum is prescribed for home equity or 1-4 family
permanent mortgage loans, the regulations indicate that such loans
equal to or in excess of a 90% ratio would be expected to be supported
by private mortgage insurance or readily marketable collateral.
Banking laws and regulations also restrict transactions by insured
banks owned by a bank holding company, including loans to and certain
purchases from the parent holding company, non-bank and bank
subsidiaries of the parent holding company, principal shareholders,
officers, directors and their affiliates, and investments by the
subsidiary bank in the shares or securities of the parent holding
company (or of any other non-bank or bank affiliates), and acceptance
of such shares or securities as collateral security for loans to any
borrower. The bank's regulators also review other payments, such as
management fees, made by the subsidiary bank to affiliated companies.
The Company's bank subsidiaries are also subject to legal limitations
on the frequency and amount of dividends that can be paid to the
Company. A Michigan state bank may not declare a cash dividend or a
dividend in kind except out of net profits then on hand after
deducting all losses and bad debts, and then only if it will have a
surplus amounting to not less than 20% of its capital after the
payment of the dividend. Moreover, a Michigan state bank may not
declare or pay any cash dividend or dividend in kind until the
cumulative dividends on its preferred stock, if any, have been paid in
full. Further, if the surplus of a Michigan state bank is at any time
less than the amount of its capital, before the declaration of a cash
dividend or dividend in kind, it must transfer to surplus not less
than 10% of its net profits for the preceding half-year (in the case
of quarterly or semi-annual dividends) or the preceding two
consecutive half-year periods (in the case of annual dividends).
An Ohio savings bank must pay all its expenses each year only out of
its gross earnings. Only after provision has been made for the payment
of such expenses, interest, and the maintenance of a reserve for
absorption of bad debts and other losses and other net worth accounts
at levels required by Ohio law and regulations of the Ohio
Superintendent of the Division of Financial Institutions, may an Ohio
savings bank declare and pay dividends. Such dividends may be declared
and paid out of current earnings and undivided profits.
The payment of dividends by the Company and its bank subsidiaries is
also affected by various regulatory requirements and policies, such as
the requirement to maintain adequate capital above regulatory
guidelines. The "prompt corrective action" provisions of FDICIA impose
further restrictions on the payment of dividends by insured banks
which fail to meet specified capital levels and, in some cases, their
parent bank holding companies.
9
FDICIA establishes five capital categories, and the federal depository
institution regulators, as directed by FDICIA, have adopted, subject
to certain exceptions, the following minimum requirements for each of
such categories:
Total Tier 1
Risk-Based Risk-Based Leverage
Capital Ratio Capital Ratio Ratio
------------- ------------- --------
Well capitalized 10% or above 6% or above 5% or above
Adequately capitalized 8% or above 4% or above 4% or above
Undercapitalized Less than 8% Less than 4% Less than 4%
Significantly undercapitalized Less than 6% Less than 3% Less than 3%
Critically undercapitalized -- -- A ratio of
tangible equity
to total assets
of 2% or less
Subject to certain exceptions, these capital ratios are generally
determined on the basis of Call Reports submitted by each depository
institution and the reports of examination by each institution's
appropriate federal depository institution regulatory agency.
FDICIA generally prohibits a depository institution from making any
capital distribution (including payment of a dividend) or paying any
management fee to its holding company if the depository institution
would thereafter be undercapitalized.
The FDIC may prevent an insured bank from paying dividends if the bank
is in default of payment of any assessment due to the FDIC. In
addition, payment of dividends by a bank may be prevented by the
applicable federal regulatory authority if such payment is determined,
by reason of the financial condition of such bank, to be an unsafe and
unsound banking practice. The Federal Reserve Board has issued a
policy statement providing that bank holding companies and insured
banks should generally only pay dividends out of current operating
earnings.
These regulations and restrictions may limit the Company's ability to
obtain funds from its subsidiaries for its cash needs, including funds
for acquisitions, payment of dividends and interest and the payment of
operating expenses.
The Financial Institutions Reform, Recovery, and Enforcement Act of
1989 ("FIRREA") provides for cross-guarantees of the liabilities of
insured depository institutions pursuant to which any insured bank
subsidiary of a holding company may be required to reimburse the FDIC
for any loss incurred or reasonably anticipated to be incurred by the
FDIC after August 9, 1989 in connection with a default of any of such
holding company's other insured subsidiary banks or from assistance
provided to such other subsidiaries in danger of default. This right
of recovery by the FDIC generally is superior to any claim of the
shareholders of the depository institution that is liable or any
affiliate of such institution. The bank and savings bank subsidiaries
of the Company are subject to such cross-guarantees.
10
Among other things, FDICIA requires the federal depository institution
regulators to take prompt corrective action in respect of depository
institutions that do not meet minimum capital requirements. The scope
and degree of regulatory intervention is linked to the capital
category to which a depository institution is assigned.
In general, a depository institution may be reclassified to a lower
category than is indicated by its capital position if the appropriate
federal depository institution regulatory agency determines the
institution to be otherwise in an unsafe or unsound condition or to be
engaged in an unsafe or unsound practice. This could include a failure
by the institution, following receipt of a less-than-satisfactory
rating on its most recent examination report, to correct the
deficiency.
Among other things, undercapitalized depository institutions are
subject to growth limitations and are required to submit capital
restoration plans. A depository institution's holding company must
guarantee a capital restoration plan, up to an amount equal to the
lesser of 5% of the depository institution's assets at the time it
becomes undercapitalized or the amount of the capital deficiency when
the institution fails to comply with the plan. The Federal depository
institution agencies may not accept a capital plan without
determining, among other things, that the plan is based on realistic
assumptions and is likely to succeed in restoring the depository
institution's capital. If a depository institution fails to submit an
acceptable plan, or fails in any material respect to implement an
approved plan, it is treated as if it is significantly
undercapitalized.
In addition to these restrictions applicable to undercapitalized
institutions, significantly undercapitalized depository institutions
may be subject to a number of requirements and restrictions, including
orders to sell sufficient voting stock to become adequately
capitalized, make changes in management personnel, and require the
parent holding company to divest or liquidate any affiliate of the
institution or the institution itself under certain circumstances.
Subject to certain exceptions, critically undercapitalized depository
institutions are required to be placed in conservatorship or
receivership, generally within 90 days.
Republic Bank is subject to FDIC deposit insurance assessments paid to
the Bank Insurance Fund ("BIF"). Republic Savings is subject to FDIC
deposit insurance assessments paid to the Savings Association
Insurance Fund ("SAIF"). Pursuant to FDICIA, the FDIC has implemented
a risk-based assessment scheme. Under this arrangement, each
depository institution is assigned to one of nine categories (based
upon three categories of capital adequacy and three categories of
perceived risk to the applicable insurance fund).
The FDIC is further required by FDICIA to establish the BIF and SAIF
deposit insurance assessment rates, respectively, at a level which
will maintain, or restore over a period of not more than 15 years, the
mandated reserve ratios of 1.25%. In November, 1995, the FDIC
determined that the BIF had reached the required ratio by June 30,
1995. The FDIC does not expect the SAIF to reach the mandated
11
reserve ratio until 2002. FDICIA also grants the FDIC the power to
impose special deposit insurance assessments in addition to the
regular assessments.
FDICIA added numerous other provisions, including new accounting,
audit and reporting requirements, new regulatory standards in areas
such as asset quality, earnings and compensation, and revised
regulatory standards for, among other things, powers of state
chartered banks, branch closures, and reduction of systemic risk in
the payments system.
4. Mortgage Subsidiaries
The Company's non-depository mortgage banking subsidiaries, Republic
Mortgage, Market Street, and CUB Funding are engaged in the business
of originating or purchasing, selling and servicing mortgage loans
secured by residential real estate. In the origination of mortgage
loans, Republic Mortgage, Market Street and CUB Funding are subject to
State usury and licensing laws and to various federal statutes, such
as the Equal Credit Opportunity Act, Fair Credit Reporting Act, Truth
in Lending Act, Real Estate Settlement Procedures Act, and Home
Mortgage Disclosure Act, and the regulations promulgated thereunder,
which prohibit discrimination, specify disclosures to be made to
borrowers regarding credit and settlement costs, and regulate the
mortgage loan servicing activities of such entities, including the
maintenance and operation of escrow accounts and the transfer of
mortgage loan servicing. The Riegle Act imposed new escrow
requirements on depository and non-depository mortgage lenders and
servicers under the National Flood Insurance Program. See "Recently
Enacted and Proposed Legislation."
Market Street and CUB Funding purchase mortgage loans from approved
correspondents and brokers. In addition to the underwriting done by
the correspondent, each of the mortgage companies performs its own
underwriting review of the mortgage loans it purchases. Correspondents
and brokers qualify to participate in Market Street and CUB Funding's
wholesale program only after a review of their reputation, mortgage
lending experience and financial condition, including a review of
references and financial statements. In such activities, the mortgage
companies are also subject to applicable usury and other state and
federal laws, including various states' licensing statutes. As sellers
and servicers of mortgage loans, Republic Mortgage, Market Street and
CUB Funding are participants in the secondary mortgage market with
some or all of the following: private institutional investors, FNMA,
FHLMC, GNMA, VA and FHA. In their dealings with these agencies,
Republic Mortgage, Market Street and CUB Funding are subject to
various eligibility requirements prescribed by the agencies, including
but not limited to net worth, quality control, bonding, financial
reporting and compliance reporting requirements. The mortgage loans
which they originate and purchase are subject to agency-prescribed
procedures, including without limitation inspection and appraisal of
properties, maximum loan-to-value ratios, and obtaining credit reports
on prospective borrowers. On some types of loans, the agencies
prescribe maximum loan amounts, interest rates and fees. When selling
mortgage loans to FNMA, FHLMC, GNMA, VA and FHA, each of Republic
12
Mortgage, Market Street and CUB Funding represents and warrants that
all such mortgage loans sold by it conform to their requirements. If
the mortgage loans sold are found to be non-conforming mortgage loans,
such agency may require the seller (i.e., Republic Mortgage, Market
Street or CUB Funding) to repurchase the non-conforming mortgage
loans. Additionally, FNMA, FHLMC, GNMA, VA and FHA may require
Republic Mortgage, Market Street or CUB Funding to indemnify them
against all losses arising from their failure to perform their
contractual obligations under the applicable selling or servicing
contract. Certain provisions of the Housing and Community Development
Act of 1992, and regulations adopted thereunder may affect the
operations and programs of FNMA and FHLMC. See "Recently Enacted and
Proposed Legislation."
5. Recently Enacted and Proposed Legislation
The Housing and Community Development Act of 1992 ("HCDA") amended (i)
the Real Estate Settlement Procedures Act ("RESPA") to extend its
coverage to loans made to refinance existing residential loans and to
residential loans secured by junior liens, and (ii) the Home Mortgage
Disclosure Act ("HMDA") to require that covered lenders make a
modified form of their mortgage loan application registers available
for public inspection on request, and more rapidly make available to
the public their mortgage loan disclosure statements. The Federal
Reserve Board and the Department of Housing and Urban Development
("HUD") have adopted regulations generally implementing those changes.
HCDA established housing goals for FNMA and FHLMC for low- and
moderate-income housing, special affordable housing, and central
cities, rural areas, and other under-served areas, each as defined by
the Act. Each of FNMA and FHLMC is required to (i) review its
underwriting guidelines, (ii) take affirmative steps to assist primary
lenders such as the Company in making housing credit available in
areas with concentrations of low income and minority families, (iii)
collect expanded data from seller servicers on mortgage loans
(including race, gender and income of mortgagors), and (iv) assist
governmental agencies in investigations of, and take remedial actions
against, mortgage lenders violating the Fair Housing Act or Equal
Credit Opportunity Act. The Secretary of HUD is required to issue
implementing regulations, and to monitor and enforce compliance by
FNMA and FHLMC with those goals and provisions.
Effective January 2, 1996, the Secretary of HUD has adopted
regulations governing FNMA and FHLMC, including the establishment of
housing goals. In general, the annual goals are stated as a percentage
of the number of dwelling units financed by each agency's mortgage
purchases during the year. The aggregate of the goals for the HCDA
established categories for each of FNMA and FHLMC under the proposed
regulations are 73% for 1996, 80% for each of the years 1997 through
1999, with new annual goals to be adopted for 2000 and subsequent
years (pending such adoption the 1999 standards would continue on an
interim basis).
13
HCDA also established the Office of Federal Housing Enterprise
Oversight ("OFHEO"), a new supervisory authority over FNMA and FHLMC.
Among other things, the Director of OFHEO is required to adopt
regulations within 18 months of appointment prescribing minimum
risk-based capital levels for FNMA and FHLMC, to take supervisory
action against such an enterprise which fails to meet required capital
levels (including the adoption of a capital restoration plan and
restrictions on capital distributions by the enterprise to its
shareholders such as the Company), and, in the Director's discretion,
to take other supervisory action, including appointment of a
conservator for an enterprise which becomes significantly or
critically undercapitalized. The OFHEO has requested public comment on
minimum risk-based capital levels in advance of issuing proposed
regulations on that subject. In addition, OFHEO has informally
established interim minimum capital and capital classification
provisions not reflecting risk-adjustment, and in June, 1995 published
proposed regulations which would formally adopt minimum capital and
capital classification standards. It is not possible to predict the
potential impact upon the Company, if any, of compliance by FNMA and
FHLMC with the requirements of HCDA and such regulations.
As part of the Omnibus Budget Reconciliation Act of 1993, Congress
amended the Federal Deposit Insurance Act ("FDIA") to require
receivers of failed depository institutions to give priority to
depositors over general creditors, subordinated creditors and
shareholders when distributing assets of a failed institution. This
depositor preference will apply on a nationwide basis.
In 1994, the Congress enacted two major pieces of banking legislation,
the Riegle Act and the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 (the "Riegle-Neal Act"). The Riegle Act
addressed such varied issues as the promotion of economic
revitalization of defined urban and rural "qualified distressed
communities" through special purpose "Community Development Financial
Institutions", the expansion of consumer protection with respect to
certain loans secured by a consumer's home and reverse mortgages, and
reductions in compliance burdens regarding Currency Transaction
Reports, in addition to reform of the National Flood Insurance
Program, the promotion of a secondary market for small business loans
and leases, and mandating specific changes to reduce regulatory
impositions on depository institutions and holding companies.
The Riegle-Neal Act substantially changed the geographic constraints
applicable to the banking industry. Effective September 29, 1995, the
application of a bank holding company located in one State (the "home
State") to acquire a bank located in any other State (the "host
State") may be approved by the Federal Reserve Board under the BHC Act
notwithstanding any prohibition of such acquisition in the law of any
State. The Riegle-Neal Act permits States to require that a target
bank have been in operation for a minimum period, up to five years,
and to impose non-discriminatory limits on the percentage of the total
amount of deposits with insured depository institutions in the State
which may be controlled by a single bank or bank holding company. In
addition, the new Act imposes Federal deposit concentration limits
(10% of nationwide total deposits, and 30% of total deposits
14
in the host State on applications subsequent to the applicant's
initial entry to the host State, subject to waiver of the State
deposit concentration limit in certain circumstances by the host
State), and adds new statutory conditions to Federal Reserve Board
approval, i.e., that the applicant meets or exceeds all applicable
Federal regulatory capital standards and is "adequately managed."
Also effective September 29, 1995, any bank subsidiary (and, in
certain circumstances thrift subsidiary) of a bank holding company may
receive deposits to existing accounts, renew time deposits, and close,
service and receive payments on (but not disburse proceeds of) loans,
as an agent for its depository institution affiliates without being
considered a branch of the affiliate under any otherwise applicable
law. Such agency activities must be conducted on terms consistent with
safe and sound banking practices.
The Riegle-Neal Act also authorizes, effective June 1, 1997, the
responsible Federal banking agency to approve applications for the
interstate acquisition of branches or mergers of depository
institutions across State lines without regard to whether such
activity is contrary to State law. Any State may, however, by adoption
of a non-discriminatory law after September 29, 1994 and before June
1, 1997, either elect to have this provision take effect before June
1, 1997 (as Michigan and a number of other States have already done)
or opt-out of the provision. The effect of opting out is to prevent
banks chartered by, or having their main office located in, such State
from participating in any interstate branch acquisition or merger.
Each State is permitted to prohibit interstate branch acquisitions
(i.e., acquisition of a branch without acquisition of the entire
target bank), to examine acquired or de novo branches of out-of-State
banks with respect to compliance with certain host State laws, and to
retain a minimum age requirement of up to five years, a
non-discriminatory deposit cap, and non-discriminatory notice or
filing requirements. The responsible Federal agency will apply the
same Federal concentration limits and capital and management adequacy
requirements noted above with respect to BHC Act applications.
Branches acquired in a host State by a State-chartered bank will be
subject to the activity limits and other laws of the host State to the
same extent as a branch of a bank chartered by the host State.
Branches acquired in a host State by an out-of-State national bank
will be subject to community reinvestment, consumer protection, fair
lending and intrastate branching laws of the host State (except to the
extent the application of such laws to national banks is preempted by
Federal law or is determined by the Comptroller of the Currency to be
discriminatory), and to other non-tax laws of the host State to the
same extent as branches of a national bank having its main office in
the host State. The establishment of de novo branches by an out-of
State bank will continue to require express statutory authority under
the law of the host State and of the chartering jurisdiction.
15
Among other things, the Riegle-Neal Act also preserves State taxation
authority, prohibits the operation by out-of-State banks of interstate
branches as deposit production offices, imposes additional notice
requirements upon interstate banks proposing to close branch offices
in a low or moderate-income area, and creates new Community
Reinvestment Act evaluation requirements for interstate depository
institutions. The Act mandates new restrictions on interstate
activities of foreign banks, and requires public notice of, and
opportunity to comment on, any proposed ruling by a Federal banking
agency which would preempt certain State laws.
In November, 1995, Michigan exercised its right to opt-in early to the
Riegle-Neal Act, and permitted non-U.S. banks to establish branch
offices in Michigan. Effective November 29, 1995, the Michigan Banking
Code was amended to permit, in appropriate circumstances and with the
approval of the Commissioner of the FIB, (i) the acquisition of
Michigan-chartered banks (such as Republic Bank) by FDIC-insured
banks, savings banks, or savings and loan associations located in
other states, (ii) the sale by a Michigan-chartered bank of one or
more of its branches (not comprising all or substantially all of its
assets) to an FDIC-insured bank, savings bank or savings and loan
association located in a State in which a Michigan-chartered bank
could purchase one or more branches of the purchasing entity, (iii)
the acquisition by a Michigan-chartered bank of an FDIC-insured bank,
savings bank or savings and loan association located in another State,
(iv) the acquisition by a Michigan-chartered bank of one or more
branches (not comprising all or substantially all of the assets) of an
FDIC-insured bank, savings bank or savings and loan association
located in another State, (v) the consolidation of one or more
Michigan-chartered banks and FDIC-insured banks, savings banks or
savings and loan associations located in other States having laws
permitting such consolidation, with the resulting organization
chartered either by Michigan or one of such other States, (vi) the
establishment by Michigan-chartered banks of branches located in other
States, the District of Columbia, or U.S. territories or
protectorates, (vii) the establishment of branches in Michigan by
FDIC-insured banks located in other States, the District of Columbia
or U.S. territories or protectorates having laws permitting a
Michigan-chartered bank to establish a branch in such jurisdiction,
and (viii) the establishment by foreign banks of branches located in
Michigan. The amending legislation also expanded the regulatory
authority of the Commissioner of the FIB and made certain other
changes.
In July 1993, the President requested the Federal depository
institution regulatory agencies to re-focus their implementation of
the Community Reinvestment Act ("CRA") on more objective,
performance-based assessment standards that would minimize compliance
burdens while stimulating improved performance. Following a two-year
process of development, proposals, and public comment, the agencies
jointly issued completely revised CRA regulations in July 1995.
16
The new regulations will be applied in phases over a two-year
transition period. In general, the new require an evaluation of a
bank's actual performance in making home mortgage, small business,
small farm, and community development loans and qualified community
development investments, and in effectively delivering retail banking
services, or, at the option of the bank, the bank's accomplishment of
a strategic plan developed by the bank and previously approved by the
responsible Federal agency. The new regulations also alter
record-keeping, reporting and disclosure requirements, provide
procedures for consideration of loans made by affiliates, and provide
more detailed, uniform definitions of the performance ratings assigned
to each institution by the responsible Federal agency.
On March 8, 1994, the Interagency Task Force on Fair Lending, a body
consisting of the Federal depository institution regulators, the
Departments of Justice and Housing and Urban Development and four
other Federal agencies (including the OFHEO), issued a joint policy
statement on discrimination in lending. The policy statement applies
to all lenders, and provides an agreed basis for future agency
rule-making and administrative enforcement of various federal laws
prohibiting lending discrimination.
Bills which would repeal certain of the investment banking
restrictions applicable to commercial banks under the Banking Act of
1933, commonly known as the Glass-Steagall Act are currently pending
in Congress. There can be no assurance whether, or in what form, any
of these bills will become law.
6. Regulation of Proposed Acquisitions
In general, any direct or indirect acquisition by the Company of any
voting shares of any bank which would result in the Company's direct
or indirect ownership or control of more than 5% of any class of
voting shares of such bank, and any merger or consolidation of the
Company with another bank holding company, will require the prior
written approval of the Federal Reserve Board under the BHC Act. In
acting on such applications, the Federal Reserve Board must consider
various statutory factors, including among others, the effect of the
proposed transaction on competition in relevant geographic and product
markets, and each party's financial condition, managerial resources,
and record of performance under the Community Reinvestment Act.
Effective September 29, 1995, the BHC Act no longer prevents the
Federal Reserve Board from approving the acquisition of a bank because
of contrary State law. See "Recently Enacted and Proposed
Legislation."
The merger or consolidation of an existing bank subsidiary of the
Company with another bank, or the acquisition by such a subsidiary of
assets of another bank, or the assumption of liability by such a
subsidiary to pay any deposits in another bank, will require the prior
written approval of the responsible Federal depository institution
regulatory agency under the Bank Merger Act, based upon a
consideration of statutory factors similar to those outlined above
with respect to the BHC Act. In addition, an application to, and the
prior approval of, the Federal Reserve Board may be required under the
BHC Act, in certain such cases.
17
Each of the foregoing types of applications are subject to public
notice and comment procedures, and, in many cases, to prior notice
and/or approval of State bank regulatory authorities. Adverse public
comments received, or adverse considerations raised by the regulatory
agencies, may delay or prevent consummation of the proposed
transaction. In addition, such a transaction generally may not be
consummated before the thirtieth calendar day (or if the Attorney
General has made no adverse comment to the Federal Reserve Board
thereon, such shorter period not less than 15 calendar days as the
Board may specify with the concurrence of the Attorney General) after
final approval of the transaction by the Federal depository
institution regulatory agency.
With certain limited exceptions, the BHC Act prohibits bank holding
companies, such as the Company, from acquiring direct or indirect
ownership or control of voting shares or assets of any company other
than a bank, unless the company involved is engaged solely in one or
more activities which the Federal Reserve Board has determined to be
so closely related to banking or managing or controlling banks as to
be a proper incident thereto. Any such acquisition will require,
except in certain limited cases, at least 60 days' prior written
notice to the Federal Reserve Board.
In evaluating a written notice of such an acquisition, the Federal
Reserve Board will consider various factors, including among others
the financial and managerial resources of the notificant, and the
relative public benefits and adverse effects which may be expected to
result from the performance of the activity by an affiliate of the
Company. The Board may apply different standards to activities
proposed to be commenced de novo and activities commenced by
acquisition, in whole or in part, of a going concern. The required
notice period may be extended by the Board under certain
circumstances, including a notice for acquisition of a company engaged
in activities not previously approved by regulation of the Board. This
required regulatory written notice is subject to public notice and
comment procedures, and adverse public comments received, or adverse
considerations raised by regulatory agencies, may delay or prevent
consummation of such an acquisition. If such a proposed acquisition is
not disapproved or subjected to conditions by the Board within the
applicable notice period, it is deemed approved by the Board. Such an
acquisition may also require 30 days' prior notice to the Department
of Justice and the Federal Trade Commission.
18
Item 2. PROPERTIES AND EMPLOYEES
The executive offices of the Company are located at 1070 East Main Street,
Owosso, Michigan, a two-story building which is also occupied by the Owosso
branch of Republic Bank. This building is owned by Republic Bank. The Company
also maintains administrative offices at the principal office of Republic Bank
in Ann Arbor, Michigan.
Currently, the Company's bank subsidiary Republic Bank, operates 25 offices,
including two loan production offices within the State of Michigan, of which
fourteen are owned and eleven are leased. The Company's state savings bank
operates 10 offices within the state of Ohio, of which two are owned and eight
are leased and one office in Indiana which is leased.
Currently, the Company's mortgage banking subsidiaries operate seven offices
in Michigan, thirteen offices in Florida, nine offices in California, five
offices each in Arizona and Virginia, three offices each in Colorado and New
York, two offices each in Alabama, Connecticut, Georgia, and Maryland, and one
office each in Idaho, Illinois, Massachusetts, Nevada, North Carolina, Oregon,
and Washington. All of the Company's mortgage banking offices are leased, with
the exception of Republic Mortgage's corporate office located in Farmington
Hills, Michigan.
At December 31, 1995, total annual rental expense under real estate lease
obligations of the Company and its subsidiaries, other than inter-company
items, was approximately $3.4 million.
The Company had approximately 1,270 full-time equivalent employees at December
31, 1995.
Item 3. LEGAL PROCEEDINGS
The Company and its subsidiaries are parties to certain ordinary, routine
litigation incidental to the Company's business. Management considers that the
aggregate liability, if any, arising from such actions would not have a
material adverse effect on the consolidated financial position of the Company.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
19
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
SECURITY HOLDER MATTERS
The information set forth under caption "Summary of Common Share Market Data"
on Page 47 of the 1995 Annual Report of the Company is incorporated herein by
reference.
Item 6. SELECTED FINANCIAL DATA
The information set forth under the caption "Five Year Summary of Selected
Financial Data" on Page 6 of the 1995 Annual Report of the Company is
incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
The information set forth under the caption "Management's Discussion and
Analysis" on Pages 7 through 20 of the 1995 Annual Report of the Company is
incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information set forth on Pages 21 through 44, and Pages 46 and 47 of
the 1995 Annual Report of the Company is incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES
Not Applicable
20
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company as of March 1, 1996 are as follows:
Position
Name Position Held Since Age
---- -------- ---------- ---
Jerry D. Campbell Chairman of the Board 1985 55
and Chief Executive Officer
Dana M. Cluckey President, Chief Operating Officer 1986 36
and Assistant Secretary
Barry J. Eckhold Vice President, Chief Credit 1990 49
Officer and Secretary
Thomas F. Menacher Senior Vice President, Treasurer and 1992 39
Chief Financial Officer
The information set forth under the caption "Directors" on Pages 5 through 7
of the definitive Proxy Statement of the Company dated March 20, 1996 filed
with the Securities and Exchange Commission pursuant to Regulation 14A is
incorporated herein by reference for information as to directors of the
Company.
Item 11. EXECUTIVE COMPENSATION
The information set forth under the captions "Compensation of Executive
Officers" on Pages 10 through 14 of the definitive Proxy Statement of the
Company dated March 20, 1996 filed with the Securities and Exchange Commission
pursuant to Regulation 14A is incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information set forth under the caption "Principal Holders of the
Company's Common Stock" on Pages 2 through 4 of the definitive Proxy Statement
of the Company dated March 20, 1996 filed with the Securities and Exchange
Commission pursuant to Regulation 14A is incorporated herein by reference.
21
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth under the caption "Related Transactions" on Page 9
of the definitive Proxy Statement of the Company dated March 20, 1996 filed
with the Securities and Exchange Commission pursuant to Regulation 14A is
incorporated herein by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) The following documents are filed as a part of this Report:
1. Financial Statements:
Page *
------
Consolidated Balance Sheets - December 31, 1995 and 1994..................... 21
Consolidated Statements of Income - Three Years Ended
December 31, 1995.......................................................... 22
Consolidated Statements of Shareholders' Equity -
Three Years Ended December 31, 1995........................................ 23
Consolidated Statement of Cash Flows - Three
Years Ended December 31, 1995.............................................. 24-25
Notes to Consolidated Financial Statements................................... 26-44
Independent Auditors' Report................................................. 46
<FN>
*Refers to page number of 1995 Annual Report of the Company.
2. Schedules:
I - Indebtedness to Related Parties (Not Applicable)
II - Guarantees of Securities of Other Issuers (Not Applicable)
(b) Reports on Form 8-K:
Not Applicable
(c) Exhibits:
3(a) Articles of Incorporation, are incorporated herein by reference to
Exhibit 3(a) to Form 10K filed March 17, 1994.
3(b) Bylaws, as amended, are incorporated herein by reference to Exhibit
3(b) to Registration Statement on Form S-4 filed March 1, 1990,
Registration No. 33-33811.
22
4(a) Indenture dated as of February 1, 1993, between the Company and NBD
Bank, N.A., as Trustee, relating to 9% Subordinated Notes due 2003,
including Form of 9% Subordinated Note due 2003: filed as Exhibit
4(d) to Amendment No. 1 to Form S-4 filed January 28, 1993,
Registration No. 33-56112, and incorporated herein by reference.
4(b) Debenture Purchase Agreement dated as of March 30, 1994, between the
Company and Scudder, Stevens & Clark, Inc., Business Men's Assurance
Company of America, Columbus Life Insurance Company and Mutual of
America Life Insurance Company, related to 7.17% Senior Debentures
due 2001, filed as Exhibit 4(p) to Form 10-K filed March 27, 1995,
and incorporated herein by reference.
4(c) Debenture Purchase Agreement dated as of January 29, 1996, between
the Company and American United Life Insurance, State Life Insurance
Co., Mutual of America Life Insurance Co., GNA, Mega Life & Health
Insurance Co. and Provident Mutual Life Insurance Company, related to
6.75% Senior Debentures due January 15, 2001 and 6.95% Senior
Debentures due January 15, 2003.
10(a) Non-Qualified Stock Option Plan of the Company, effective March 24,
1986, as amended and restated: filed as Exhibit 10(b) to Form 10-K,
filed March 23, 1993 and incorporated herein by reference.
10(b) Restricted Stock Plan of the Company, effective March 24, 1986, as
amended and restated: filed as Exhibit 10(c) to Form 10-K, filed
March 23, 1993 and incorporated herein by reference.
10(c) Form of Indemnity Agreement and Schedule of officers and directors of
the Company who executed such agreements: filed as Exhibit 10(e) to
Form S-2 filed February 28, 1992, Registration No. 33-46069, and
incorporated herein by reference.
10(d) Directors Compensation Plan of the Company, adopted by the Board of
Directors on October 15, 1992: filed as Exhibit 10(e) to Form 10-K,
filed March 23, 1993 and incorporated herein by reference.
10(e) Deferred Compensation Plan of the Company, adopted by the Board of
Directors on December 16, 1993: filed as Exhibit 10(e) to Form 10-K,
filed March 17, 1994 and incorporated herein by reference.
10(f) First Amended and Restated Agreement and Plan of Reorganization,
dated as of October 29, 1992, by and between the Company and Horizon
Financial Services, Inc.: filed as Exhibit 2 to Form 8-K filed
November 6, 1992, and incorporated herein by reference.
10(g) Agreement and Plan of Merger between the Company and Premier
Bancorporation, Inc., dated as of March 31, 1993: filed as Exhibit
28(c) to Form 10-K, filed March 17, 1994 and incorporated herein by
reference.
23
10(h) Purchase and Sale Agreement by and between Republic Bancorp Inc.
("Purchaser") and California United Bank, National Association
("Seller"), dated October 22, 1993: filed as Exhibit 28(e) to Form
10-K, filed March 17, 1994 and incorporated herein by reference.
10(i) Purchase and Sale Agreement by and between Republic Bank ("Seller")
and CB North ("Purchaser"), dated as of September 27, 1994: filed as
Exhibit 28(g) to Form 10-K, filed March 27, 1995 and incorporated
herein by reference.
10(j) Form of servicing and Disposition Agreement for Inventory and
Construction Loan Portfolio, dated November 21, 1992 between Market
Street Mortgage Corporation and the Company: filed as Exhibit 2(b) to
Form 8-K filed November 23, 1992, and incorporated herein by
reference.
11. Statement Re: Computation of per share earnings is incorporated by
reference to Note 14 of the Notes to Consolidated Financial
Statements, filed herewith as Exhibit 13.
13. 1995 Annual Report of the Company and Independent Auditors' Report on
the Company's December 31, 1995, 1994, and 1993 Financial Statements.
21. Subsidiaries of the Registrant are incorporated by reference to Note
1 of the Notes to Consolidated Financial Statements, filed herewith
as Exhibit 13.
23. Consent of Deloitte & Touche LLP to incorporation by reference of its
report dated January 18, 1996 appearing in the Company's Form 10-K
for the year ended December 31, 1995, and into the following
Registration Statements of the Company: Form S-8 dated December 4,
1992, Registration No. 33-55336, and Form S-8 dated December 4, 1992,
Registration No. 33-55304, and Form S-8 dated May 10, 1993,
Registration No. 33-62508, and Form S-3 dated May 26, 1993,
Registration No. 33-61842.
27. Financial Data Schedule containing summary financial information
extracted from the consolidated balance sheet as of December 31, 1995
and consolidated statement of income for the twelve months ended
December 31, 1995.
NOTE: Items 1, 2, 5, 6, 7, 8, 9, 12, 14, 15, 16, 17, 18, 19, 20, 22,
24, 25, 26, 28 and 99 are not applicable.
24
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 22nd day
of March, 1996.
/s/ JERRY D. CAMPBELL /s/ THOMAS F. MENACHER
- ------------------------------- --------------------------------------
Jerry D. Campbell Thomas F. Menacher
Chief Executive Officer Chief Financial and Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
registrant and in their capacity as Directors of the Company on the 22nd day
of March, 1996.
/s/ JERRY D. CAMPBELL /s/ STEPHEN M. KLEIN
- ------------------------------- --------------------------------------
Jerry D. Campbell Stephen M. Klein
/s/ DANA M. CLUCKEY /s/ JOHN J. LENNON
- ------------------------------- --------------------------------------
Dana M. Cluckey John J. Lennon
/s/ SAM H. MCGOUN
- ------------------------------- --------------------------------------
Bruce L. Cook Sam H. McGoun
/s/ RICHARD J. CRAMER
- ------------------------------- --------------------------------------
Richard J. Cramer Kelly E. Miller
/s/ GEORGE A. EASTMAN /s/ JOE D. PENTECOST
- ------------------------------- --------------------------------------
George A. Eastman Joe D. Pentecost
/s/ HOWARD J. HULSMAN /s/ GEORGE B. SMITH
- ------------------------------- --------------------------------------
Howard J. Hulsman George B. Smith
/s/ GARY HURAND /s/ JEOFFREY K. STROSS
- ------------------------------- --------------------------------------
Gary Hurand Jeoffrey K. Stross
/s/ DENNIS J. IBOLD
- -------------------------------
Dennis J. Ibold
25