SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________________________
FORM 11-K
Annual Report Pursuant to Section 15(d)
of the Securities Exchange Act of 1934
__________________________________________________
(X) Annual report pursuant to Section 15(d)
of the Securities Exchange Act of 1934.
For the fiscal year ended December 31, 2001
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 December 31, 2001 and 2000 and the
year ended December 31, 2001, Supplemental Schedules for
the year ended December 31, 2001, and Report of Independent
Auditors dated June 7, 2002
Attached as Exhibit 23 is written Consent of Independent Auditor,
Ernst & Young LLP.
REPUBLIC BANCORP INC.
TAX DEFERRED SAVINGS PLAN
TABLE OF CONTENTS
Page Number
-----------
Report of Independent Auditors 1
Financial Statements for the Years Ended December 31, 2001 and 2000:
Statements of Assets Available for Benefits 2
Statement of Changes in Assets Available for Benefits 3
Notes to Financial Statements 4 - 7
Signatures 8
Supplemental Schedules for the Year Ended December 31, 2001:
Schedule G, Part I - Schedule of Loans or Fixed Income Obligations in Default
or Classified as Uncollectible N/A
Schedule G, Part II - Schedule of Leases in Default or Classified as Uncollectible N/A
Schedule G, Part III - Schedule of Non-Exempt Transactions N/A
Schedule H, Line 4i - Schedule of Assets (Held at End of Year) 9
Schedule H, Line 4j - Schedule of Reportable Transactions 10
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 statements of assets available for benefits of
Republic Bancorp Inc. Tax-Deferred Savings Plan and Trust as of December 31,
2001 and 2000, and the related statements of changes in assets available for
benefits for the year ended December 31, 2001. 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 audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the assets available for benefits of the Plan at December
31, 2001 and 2000, and the changes in its assets available for benefits for the
year ended December 31, 2001, in conformity with accounting principles generally
accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental Schedule of Assets
(Held at End of Year) as of December 31, 2001 and Schedule of Reportable
Transactions for the year then ended are presented for purposes of additional
analysis and are not a required part of the financial statements but are
supplemental information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of the
Plan's management. 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 7, 2002
Detroit, Michigan
1
REPUBLIC BANCORP INC. TAX-DEFERRED SAVINGS PLAN
STATEMENTS OF ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31,
2001 2000
----------- -----------
ASSETS
- ------
Investments, at fair value:
Cash and Cash Equivalents $ 44,722 $ 50,675
Common Stock:
Republic Bancorp Inc. Common Stock
(2,378,323 and 2,658,302 shares at 12/31/01
and 12/31/00, respectively) 33,146,396 26,334,643
Stock Mutual Funds 24,427,659 26,686,552
D&N Capital Corporation Preferred Stock 112,775 215,723
Collective Investment Fund 4,479,901 4,573,219
Loans to Participants 1,238,148 1,389,835
----------- -----------
Total Investments 63,449,601 59,250,647
Receivables:
Participants' contributions 121,637 88,469
Employer's contribution 104,073 41,201
----------- -----------
Total Receivables 225,710 129,670
----------- -----------
Assets Available for Benefits $63,675,311 $59,380,317
=========== ===========
See notes to financial statements.
2
REPUBLIC BANCORP INC. TAX-DEFERRED SAVINGS PLAN
STATEMENT OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 2001
Assets Available for Benefits, January 1, 2001 $ 59,380,317
Additions:
Participant contributions 5,219,557
Employer contributions, net of forfeitures 1,873,639
Dividends on Republic Bancorp Inc. stock 806,085
Dividends and interest income on investments in
stock mutual funds, collective investment fund
and loan fund 527,553
Net appreciation in fair value of Republic
Bancorp Inc. stock 9,965,242
------------
Total additions 18,392,076
Deductions:
Net depreciation in fair value of investments in
stock mutual funds and collective investment
fund (2,726,828)
Benefits paid to participants (11,365,354)
Administrative loan fees (4,900)
------------
Total deductions (14,097,082)
------------
Net additions 4,294,994
------------
Assets Available for Benefits, December 31, 2001 $ 63,675,311
============
See notes to financial statements.
3
REPUBLIC BANCORP INC.
TAX-DEFERRED SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
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. As of
December 31, 2001 and 2000, there were approximately 1,800 and 2,200 plan
participants, respectively. There were approximately 1,000 and 1,450 active
participants in the Plan at December 31, 2001 and 2000, 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, 2001 and 2000, the amount of forfeited
nonvested accounts totaled $290,322 and $154,311, respectively. These
amounts are used to reduce employer contributions.
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.
The Plan provides participants with the following ten investment options:
Republic Bancorp Inc. Common Stock seeks long-term capital appreciation
by investing entirely in the common stock of Republic Bancorp Inc.
The Vanguard Windsor II Fund seeks to provide long-term growth of
capital. As a secondary objective, it seeks to provide some dividend
income. The fund invests mainly in large and medium-size companies
whose stocks are considered by the fund's investment advisers to be
undervalued.
4
1. PLAN DESCRIPTION (Continued)
The American Century Ultra Fund seeks long-term capital growth by investing
mainly in common stocks of larger companies with earnings and revenues that
are not only growing, but growing at a successively faster, or
accelerating, pace as determined by the fund's investment advisor.
The First American 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 First American Bond IMMDEX Fund aims to provide investors with high
current income consistent with limited risk to capital by investing in a
combination of intermediate and longer-term securities issued or guaranteed
by the U.S. government or its agencies or instrumentalities (U.S.
government securities), corporate debt obligations, debt obligations issued
by foreign governments and other foreign issuers, and mortgage- and
asset-backed securities. The advisor attempts to make the fund's duration,
return and overall interest-rate sensitivity comparable to that of the
Lehman Brothers Government/Credit Bond Index.
The First American Balanced Fund seeks to maximize total return by
investing in a balanced portfolio of stocks and bonds. The mix of
securities will change based on existing and anticipated market conditions,
but over the long term the fund's asset mix is likely to average
approximately 60% equity securities and 40% debt securities. The fund
invests in common stocks that the fund's adviser believes exhibit the
potential for superior growth based on factors such as strong competitive
position, strong management, and sound financial condition. The fund also
invests U.S. government securities, mortgage- and asset-backed securities,
and corporate debt obligations.
The Janus Adviser Balanced Fund seeks long-term capital growth, consistent
with preservation of capital and balanced by current income. The fund is
designed for investors who primarily seek growth of capital rather than a
consistent level of income. The fund invests in securities for their growth
and income potential and also in fixed income securities. The fund shifts
assets between its growth and income components based on its adviser's
analysis of relevant market, financial, and economic conditions.
The MFS Capital Opportunities Fund seeks capital appreciation by investing
in common stock and related securities such as preferred stock, convertible
securities, and depositary receipts. The fund invests primarily in U.S.
companies of all sizes that its investment adviser believes have favorable
growth prospects and attractive valuations based on current and expected
earnings or cash flow.
The PIMCO Low Duration Fund seeks maximum return consistent with
preservation of capital and prudent investment management by investing in a
diversified portfolio of fixed income instruments of varying maturities.
The average portfolio duration of the fund normally varies within a one-to
three-year time frame, based on the investment adviser of the fund's
forecast for interest rates. The fund invests primarily in investment-grade
debt securities.
5
1. PLAN DESCRIPTION (Continued)
The Stable Asset Portfolio (Collective Investment Fund) seeks to
maintain a constant principal value and to generate a competitive
current yield. The fund invests in a diversified portfolio of
investment contracts issued by highly rated insurance companies and in
other stable assets or cash equivalents.
Former D&N Financial Corporation employees also had the option to invest in
D&N Capital Corporation preferred stock prior to D&N's merger with Republic
Bancorp in 1999. The First American Prime Obligation Fund is a money market
fund where cash is temporarily invested until it is transferred to one of
the investment options.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates: The preparation of financial statements in conformity
with accounting principles generally accepted in the United States 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, as well as 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, 2001 and 2000, account balances
of participants who have terminated employment with the Company totaled
$22,401,068 and $16,272,991, respectively. Amounts allocated to withdrawn
participants are recorded in the Form 5500 for benefit claims that have
been processed and approved for payment prior to year-end but not yet paid.
As of December 31, 2001 and 2000, $242,322 and $80,080, respectively, have
been allocated to accounts of persons who have elected to withdraw from the
plan, but have not yet been paid.
3. TAX STATUS
The Plan has received an opinion letter from the Internal Revenue Service
dated December 28, 1992, stating 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 employer adopting this form of the
plan will be considered to have a plan qualified under Section 401(a) of
the Code. Therefore, 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 believes the Plan is
being operated in compliance with the applicable requirements of the Code
and, therefore, believes that the Plan is qualified and the related trust
is tax exempt.
6
4. 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. Non-participant directed
contributions are included in the Republic Bancorp Inc. common stock fund.
December 31,
2001 2000
----------- -----------
Cash and Cash Equivalents:
First American Prime Obligation Fund $ 44,722 $ 50,675
Common Stock:
Republic Bancorp Inc. 32,939,773 * 26,129,898 *
Accrued Dividend Income 206,623 204,745
----------- -----------
33,146,396 26,334,643
Preferred Stock:
D&N Capital Corporation 112,775 215,723
Stock Mutual Funds:
Vanguard Windsor II Fund 7,243,159 * 7,793,073 *
American Century Ultra Fund 7,891,848 * 9,933,029 *
First American Equity Index Fund 4,727,085 * 5,259,685 *
First American Bond IMMDEX Fund 2,485,043 2,251,379
First American Balanced Fund 1,232,431 1,449,386
Janus Adviser Balanced Fund 423,253 -
MFS Capital Opportunities Fund 339,114 -
PIMCO Low Duration Fund 85,726 -
----------- -----------
24,427,659 26,686,552
Collective Investment Fund:
Stable Asset Fund 4,479,901 * 4,573,219 *
Loans to Participants 1,238,148 1,389,835
----------- -----------
Total Investments $63,449,601 $59,250,647
=========== ===========
5. INVESTMENT IN REPUBLIC BANCORP INC.
The Republic Bancorp Inc. Common Stock investment is the only investment
with non-participant directed contributions. Activity for this fund is as
follows for the year ended December 31, 2001.
Investment Balance at January 1, 2001 $ 26,334,643
Participant contributions 716,484
Employer contributions 1,769,566
Net appreciation in fair value 9,965,242
Dividend income 806,085
Interest income 4,199
Benefits paid to participants (4,545,046)
Net transfers to other funds (1,904,777)
----------------
Investment Balance at December 31, 2001 $ 33,146,396
===============
7
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 26, 2002 By: /s/ Travis D. Jones
-------------------- -------------------------------
Travis D. Jones, as Agent
8
Republic Bancorp Inc. Tax-Deferred Savings Plan
Employer ID #38-2604669
Plan #001
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2001
Units/ Fair
Description Shares Value
- ----------- ------ -----
First American Prime Obligation Fund 44,722 $ 44,722
* Republic Bancorp Inc. Common Stock (Cost $17,216,697) 2,378,323 33,146,396
* D&N Capital Corporation Preferred Stock 4,511 112,775
Vanguard Windsor II Fund 283,046 7,243,159
American Century Ultra Fund 287,499 7,891,848
First American Equity Index Fund 219,967 4,727,085
First American Bond IMMDEX Fund 87,780 2,485,043
First American Balanced Fund 121,183 1,232,431
Janus Adviser Balanced Fund 18,483 423,253
MFS Capital Opportunities Fund 25,250 339,114
PIMCO Low Duration Fund 8,513 85,726
Stable Asset Fund (Collective Investment Fund) 153,264 4,479,901
* Loans to 142 participants against their individual account
balances (with interest rates ranging from 5.75% to 10.50%) 1,238,148 1,238,148
-----------
Total $63,449,601
===========
* Party in interest
9
Republic Bancorp Inc. Tax-Deferred Savings Plan
Employer ID #38-2604669
Plan #001
Schedule H, Line 4j - Schedule of Reportable Transactions
Year Ended December 31, 2001
Current
Value on
Purchase Selling Transaction Net Realized
Asset Description Price Price Cost Date Gain/(Loss)
- ----------------- ----- ----- ---- ---- -----------
Series of Transactions:
- -----------------------
Republic Bancorp Inc.
Common Stock
Purchases $4,135,036 $4,135,036 $4,135,036
Sales $6,827,981 $4,333,060 $6,827,981 $2,494,921
Single Transaction:
- -------------------
None
The purchase and selling prices reported above represent the fair values of the
assets on the transaction dates.
10