UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 1998 OR Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number 33-77324 REPUBLIC BANCORP, INC. (Exact name of registrant as specified in its charter) Kentucky 61-086205 (State of other jurisdiction or (I.R.S. Employer Identification No.) incorporation or organization) 601 West Market Street, Louisville, Kentucky 40202 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (502) 584-3600 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 and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. X Yes No The number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date: 6,270,531 shares of Class A Common Stock and 1,209,037 shares of Class B Common Stock as of May 13, 1998. The Exhibit index is on page 28. This filing contains 90 pages (including this facing sheet).
REPUBLIC BANCORP, INC. FORM 10-Q TABLE OF CONTENTS PART I - FINANCIAL INFORMATION PAGE Item 1. Financial Statements 3-14 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 15-24 Item 3. Quantitative and Qualitative Disclosures about Market Risk 24 PART II - OTHER INFORMATION Item 2. Changes in Securities and Use of Proceeds 25 Item 4. Submission of Matters to a Vote of Securities Holders 25 Item 6. Exhibits and Reports on Form 8-K 26 Signatures 27
PART I ITEM 1 REPUBLIC BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (dollars in thousands) <TABLE> <CAPTION> March 31, December 31, 1998 1997 <S> <C> <C> ASSETS: Cash and cash equivalents: Cash and due from banks $ 21,354 $ 24,546 Federal funds sold and securities purchased under agreements to resell 29,675 ------------- -------------- Total cash and cash equivalents 51,029 24,546 Securities available for sale 134,364 93,826 Securities to be held to maturity 80,103 98,546 Loans, less allowance for loan losses of $8,234 (1998) and $8,176 (1997) 783,505 794,939 Mortgage loans held for sale 26,100 9,970 Federal Home Loan Bank stock 10,716 8,124 Accrued interest receivable 9,033 8,803 Premises and equipment, net 13,059 12,774 Other assets 4,667 3,422 ------------- -------------- TOTAL $ 1,112,576 $ 1,054,950 ============= ============== LIABILITIES: Deposits: Non-interest bearing $ 75,900 $ 65,913 Interest bearing 652,169 665,685 Securities sold under agreements to repurchase and other short-term borrowings 110,477 111,137 Other borrowed funds 179,164 124,405 Accrued interest payable 10,349 6,233 Guaranteed preferred beneficial interests in Company's subordinated debentures 6,452 6,452 Other liabilities 4,631 6,739 ------------- -------------- Total liabilities 1,039,142 986,564 ------------- -------------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Class A and Class B Common stock, no par value 3,615 3,613 Additional paid-in capital 10,890 10,833 Retained earnings 59,113 53,994 Net unrealized depreciation on securities available for sale, net of tax (184) (54) ------------- -------------- Total stockholders' equity 73,434 68,386 ------------- -------------- TOTAL $ 1,112,576 $ 1,054,950 ============= ============== </TABLE> See notes to consolidated financial statements.
REPUBLIC BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) THREE MONTHS ENDED MARCH 31,1998 AND 1997(in thousands,except per share data) <TABLE> <CAPTION> 1998 1997 <S> <C> <C> INTEREST INCOME: Loans, including fees $ 19,123 $ 18,815 Securities available for sale 1,725 1,463 Securities to be held to maturity: Taxable 1,475 1,978 Non-taxable 28 31 FHLB dividends 188 110 Other 246 213 ------------ ----------- Total interest income 22,785 22,610 ----------- ----------- INTEREST EXPENSE: Deposits 8,532 9,664 Short-term borrowings 1,216 1,242 Long-term debt 2,667 1,697 ----------- ----------- Total interest expense 12,415 12,603 ----------- ----------- NET INTEREST INCOME 10,370 10,007 PROVISION FOR LOAN LOSSES 643 1,298 ----------- ----------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 9,727 8,709 ----------- ----------- NON-INTEREST INCOME: Service charges on deposit accounts 753 777 Other service charges and fees 397 310 Bank card services 409 Net gain on available for sale securities 324 Net gain on sale of loans 1,009 281 Net gain on sale of deposits 4,116 Loan servicing income 166 189 Other 147 130 ----------- ------------ Total non-interest income 6,912 2,096 ----------- ----------- NON-INTEREST EXPENSE: Salaries and employee benefits 4,076 3,688 Occupancy and equipment 1,862 2,006 Communication and transportation 426 436 Marketing and development 305 363 FDIC deposit insurance 84 53 Supplies 260 242 Other 1,061 1,207 ----------- ----------- Total non-interest expense 8,074 7,995 ----------- ----------- INCOME BEFORE INCOME TAXES 8,565 2,810 INCOME TAXES 3,041 930 ------------- ----------- NET INCOME $ 5,524 $ 1,880 =========== =========== </TABLE> See notes to consolidated financial statements.
REPUBLIC BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (CONT.) THREE MONTHS ENDED MARCH 31,1998 AND 1997(in thousands, except per share data) <TABLE> <CAPTION> 1998 1997 <S> <C> <C> Other comprehensive income (loss), net of tax: Change in unrealized gain (loss) on securities $ (130) $ (664) ------------- ------------ Comprehensive income $ 5,394 $ 1,216 ============= ============ EARNINGS PER SHARE Class A $ .74 $ .25 Class B $ .73 $ .24 EARNINGS PER SHARE ASSUMING DILUTION Class A $ .71 $ .24 Class B $ .70 $ .24 </TABLE> See accompanying notes to consolidated financial statements.
REPUBLIC BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) (in thousands, except for per share data) <TABLE> <CAPTION> Net Unrealized Depreciation Common Stock Additional on Available Total Class A Class B Paid-In Retained For Sale Stockholders' Shares Shares Amount Capital Earnings Securities Equity <S> <C> <C> <C> <C> <C> <C> <C> BALANCE, January 1, 1998 6,266 1,209 $ 3,613 $ 10,833 $ 53,994 $ (54) $ 68,386 Exercised options 5 2 57 59 Dividend Declared Common: Class A ($.055 per share) (345) (345) Class B ($.05 per share) (60) (60) Net changes in unrealized depreciation on securities available for sale (130) (130) Net Income 5,524 5,524 ------- ------- ------- -------- -------- -------- ------- BALANCE, March 31, 1998 6,271 1,209 $ 3,615 $ 10,890 $ 59,113 $ (184) $ 73,434 ======= ======= ======= ======== ======== ======== ======== </TABLE> See notes to consolidated financial statements.
REPUBLIC BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (in thousands) <TABLE> <CAPTION> 1998 1997 OPERATING ACTIVITIES: <S> <C> <C> Net income $ 5,524 $ 1,880 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization of premises and equipment 838 1,047 Amortization and accretion of securities 57 135 FHLB stock dividends (188) (97) Provision for loan losses 643 1,298 Net gain on sale of securities (324) Net gain on sale of loans (1,009) (281) Net gain on sale of deposits (4,116) Proceeds from sale of loans 58,043 24,235 Origination of mortgage loans held for sale (73,164) (22,415) Changes in assets and liabilities: Accrued interest receivable (230) 532 Other assets (595) (150) Accrued interest payable 4,116 1,779 Other liabilities (2,108) 894 ------------ ----------- Net cash provided by (used in) operating activities (12,513) 8,857 ------------ ----------- INVESTING ACTIVITIES: Purchases of securities available for sale (81,269) Purchases of securities to be held to maturity (11,089) Purchases of Federal Home Loan Bank stock (2,404) (1,000) Proceeds from maturities of securities to be held to maturity 18,522 53,305 Proceeds from sales of securities available for sale 40,722 9,124 Net (increase) decrease in loans 10,208 (26,470) Purchases of premises and equipment (2,001) (1,028) Proceeds from sales of premises and equipment 878 ----------- ----------- Net cash provided by (used in) investing activities (15,344) 22,842 ----------- ----------- FINANCING ACTIVITIES: Net increase in deposits 62,151 29,301 Sale of deposits (61,564) Net decrease in securities sold under agreement to repurchase and other short-term borrowings (660) (94,183) Payments on other borrowings (35,241) (42,228) Proceeds from other borrowings 90,000 47,000 Proceeds from issuance of guaranteed preferred beneficial interests in Company's subordinated debentures 6,452 Proceeds from common stock options exercised 59 Cash dividends paid (405) (497) ------------ ------------ Net cash provided by (used in) financing activities 54,340 (54,155) ----------- ------------ NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 26,483 (22,456) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 24,546 56,671 ------------ ------------ CASH AND CASH EQUIVALENTS, END OF PERIOD $ 51,029 $ 34,215 =========== =========== </TABLE>
REPUBLIC BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (CONT.) THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (in thousands) <TABLE> <CAPTION> 1998 1997 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: <S> <C> <C> Interest $ 8,299 $ 13,135 =========== =========== Income taxes $ 2,581 $ ============= =========== Transfers from loans to real estate acquired in settlement of loans $ 583 $ 61 =========== =========== </TABLE> See notes to consolidated financial statements.
REPUBLIC BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. BASIS OF PRESENTATION (AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES) Basis of Presentation - The consolidated financial statements include the accounts of Republic Bancorp, Inc. and its wholly-owned subsidiaries, collectively "Republic". Republic is a unitary bank holding company whose primary subsidiary is Republic Bank & Trust Company (Bank). All significant intercompany balances and transactions have been eliminated in consolidation. The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month period ending March 31, 1998 are not necessarily indicative of the results that may be expected for the year ended December 31, 1998. For further information, refer to the consolidated financial statements and footnotes thereto included in Republic's annual report on Form 10-K for the year ended December 31, 1997. New Accounting Pronouncements - In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information". This standard changes the way public companies report information about operating segments in annual financial statements and requires that those companies report selected information about operating segments in interim financial reports. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. Operating segments are parts of a company for which separate information is available which is evaluated by the chief operating decision maker in deciding how to allocate resources and in evaluating performance. Required disclosures for operating segments include total segment revenues, total segment profit or loss, and total segment assets. The standard also requires disclosures regarding revenues derived from products and services (or similar groups of products or services), countries in which the company derives revenue or holds assets, and about major customers, regardless of whether this information is used in operating decision making. Republic is required to adopt the disclosure requirements in its 1998 annual report, and in interim periods in 1999. The 1999 interim period disclosures are required to include comparable 1998 information. Comprehensive Income - Republic adopted Statement of Financial Accounting Standard No. 130, "Reporting Comprehensive Income", effective for the interim period ended March 31, 1998. This Standard requires reporting of comprehensive income, defined as changes in equity other than those resulting from investments by or distributions to stockholders. Net income, plus or minus "other comprehensive income" results in comprehensive income. The only item of other comprehensive income applicable to Republic is the change in unrealized gain or loss on securities available for sale. Comprehensive income is reported on the statement of income. The period ended March 31, 1997 was restated to meet the current reporting format. Earnings Per Share - Earnings per share and earnings per share assuming dilution are computed under a new accounting standard effective in the quarter ended December 31, 1997. All prior amounts have been restated to be comparable. Earnings per share is based on income less preferred stock dividends (and, in the case of Class B Common stock, less the dividend preference on Class A Common stock) divided by the weighted average number of shares outstanding during the period. Earnings per share assuming dilution shows the effect of additional common shares issuable under stock options, convertible preferred stock and guaranteed preferred beneficial interests in Republic's subordinated debentures. All per share amounts have been restated to reflect the stock splits occurring during the periods presented.
Reclassifications - Certain amounts have been reclassified in the 1997 financial statements to conform with the current period classifications. The reclassifications have no effect on net income or stockholders' equity as previously reported. 2. CASH & CASH EQUIVALENTS During 1998, the Bank entered into agreements to purchase securities under agreements to resell ("reverse repurchase agreements"). At March 31, 1998 these reverse repurchase agreements totaled $20.0 million. The securities purchased under these reverse repurchase agreements are government agency securities and pledged against the Bank's customer repurchase accounts. The fair value of the pledged securities as of March 31, 1998 was approximately $19.95. The securities purchased under these agreements are overnight in term and maintained by a third party safekeeping agent for the benefit of the Bank. The average balance of securities purchased under reverse repurchase agreements during the first quarter of 1998 was $7.6 million with a maximum balance outstanding at any month end of $20.0 million. <TABLE> <CAPTION> 3. SECURITIES Available For Sale Securities: March 31, 1998 (in thousands) Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value <S> <C> <C> <C> <C> U.S. Treasury Securities and U.S. Government Agencies $ 92,628 $ $ (128) $ 92,500 Mortgage-Backed Securities 42,015 (151) 41,864 ----------- ------- ------- ---------- $ 134,643 $ $ (279) $ 134,364 =========== ======= ======== ========== </TABLE> <TABLE> <CAPTION> Securities To Be Held To Maturity: March 31, 1998 (in thousands) Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value <S> <C> <C> <C> <C> U.S. Treasury Securities and U.S. Government Agencies $ 75,298 $ 170 $ (247) $ 75,221 Obligations of state and political subdivisions 4,244 194 4,438 Mortgage-backed securities 561 (29) 532 ----------- --------- ----------- ----------- Total securities to be held to maturity $ 80,103 $ 364 $ (276) $ 80,191 =========== ========= =========== =========== </TABLE> Securities having an amortized cost of $210.0 million and a fair value of $209.7 million at March 31, 1998, were pledged to secure public deposits, securities sold under agreements to repurchase and for other purposes, as required or permitted by law. Gross gains on available for sale securities were $324,000 for quarter ended March 31, 1998.
<TABLE> <CAPTION> 4. LOANS March 31, 1998 December 31, 1997 -------------- ----------------- (in thousands) <S> <C> <C> Residential real estate $ 480,820 $ 480,874 Commercial real estate 74,462 76,306 Real estate construction 39,539 37,940 Commercial 22,042 21,552 Consumer 74,016 81,967 Home equity 100,154 102,512 Other 2,657 4,094 ----------- ----------- Total loans 793,690 805,245 Less: Unearned interest income and unamortized loan fees 1,951 2,130 Allowance for loan losses 8,234 8,176 ----------- ----------- Loans, net $ 783,505 $ 794,939 =========== =========== </TABLE> The following table sets forth the changes in the allowance for loan losses: <TABLE> <CAPTION> Three months ended March 31, 1998 1997 (in thousands) <S> <C> <C> Balance, beginning of period $ 8,176 $ 6,241 Provision charged to income 643 1,298 Charge-offs (702) (1,435) Recoveries 117 177 ---------- --------- Balance, end of period $ 8,234 $ 6,281 ========== ========= </TABLE> Information about Republic's investment in impaired loans is as follows: <TABLE> <CAPTION> March 31, 1998 December 31, 1997 -------------- ----------------- (in thousands) <S> <C> <C> Gross impaired loans $ 1,640 $ 1,640 Less: Related allowance for loan losses 240 240 --------- --------- Net impaired loans with related allowances 1,400 1,400 Impaired loans with no related allowances Total $ 1,400 $ 1,400 ========= ======== Average impaired loans outstanding $ 1,640 $ 1,639 ========= ======== </TABLE>
5. INTEREST BEARING DEPOSITS <TABLE> <CAPTION> March 31, 1998 December 31, 1997 -------------- ----------------- (in thousands) <S> <C> <C> Demand (NOW, Super NOW and Money Market): $ 136,710 $ 118,870 Savings 11,178 12,165 Money market certificates of deposit 36,897 41,307 Individual retirement accounts 22,555 30,167 Certificates of deposit, $100,000 and over 65,116 63,045 Other certificates of deposit 332,016 352,478 Brokered deposits 47,697 47,653 ----------- ----------- Total interest bearing deposits $ 652,169 $ 665,685 =========== =========== </TABLE> 6. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE AND OTHER SHORT-TERM BORROWINGS Short-term borrowings consist of short term excess funds from correspondent banks, repurchase agreements and overnight liabilities to deposit customers arising from a cash management program offered by Republic. While effectively deposit equivalents, such arrangements are in the form of repurchase agreements. The repurchase agreements are treated as financings; accordingly, the securities involved with the agreements are recorded as assets and are held by a safekeeping agent and the obligations to repurchase the securities are reflected as liabilities. <TABLE> <CAPTION> March 31, 1998 December 31, 1997 (dollars in thousands) <S> <C> <C> Average outstanding balance $ 112,625 $ 100,291 Average interest rate 4.32% 4.57% Maximum outstanding at month end $ 130,754 $ 111,137 End of period $ 110,477 $ 111,137 </TABLE> 7. OTHER BORROWED FUNDS <TABLE> <CAPTION> March 31, December 31, 1998 1997 (in thousands) <S> <C> <C> Federal Home Loan Bank convertible fixed rate advance (see comment below) $ 30,000 Federal Home Loan Bank variable interest rate advances, with weighted average interest rate of 5.62% at March 31, 1998, due through 1999 81,000 $ 116,000 Federal Home Loan Bank fixed interest rate advances, with weighted average interest rate of 5.84% at March 31, 1998, due through 2003 68,164 8,405 ------------ ------------ $ 179,164 $ 124,405 ============ ============ </TABLE>
During the first quarter of 1998, Republic entered into a 5 year convertible fixed rate advance with the Federal Home Loan Bank (FHLB) for $30 million. The advance is fixed for 1 year at 5.11%. At the end of the first year, the FHLB has the right to convert the fixed rate advance on a quarterly basis to a variable rate advance tied to the 3 month LIBOR index. The advance can be prepaid at any quarterly date without penalty, but may not be prepaid at any time during the fixed rate term. Republic has established a line of credit in the amount of $6.5 million and has pledged 51% of the Bank's outstanding common stock as collateral for this line of credit. The Federal Home Loan Bank advances are collateralized by a blanket pledge of eligible real estate loans with an unpaid principal balance of greater than 150% of the outstanding advances. Republic has sufficient collateral to borrow an additional $116 million from the Federal Home Loan Bank. Republic also has unsecured lines of credit totaling $16.7 million and secured lines of credit of $104.7 available through various financial institutions. During the first quarter of 1998, Republic entered into a 5 year convertible fixed rate advance with the Federal Home Loan Bank (FHLB) for $30 million. The advance is fixed for 1 year at 5.11%. At the end of the first year the FHLB has the right to convert the fixed rate advance on a quarterly basis to a variable rate advance based on the 3 month LIBOR index. The advance can be prepaid at any quarterly repricing date without penalty, but may not be prepaid any time during the fixed rate term. Aggregate future principal payments on borrowed funds as of March 31, 1998 are as follows: <TABLE> <CAPTION> Year (in thousands) <S> <C> 1998 $ 2,827 1999 85,044 2000 1,103 2001 190 2002 2003 90,000 ------------ Total $ 179,164 ============ </TABLE> 8. GUARANTEED PREFERRED BENEFICIAL INTERESTS In February 1997, Republic Capital Trust (RCT), a trust subsidiary of Republic Bancorp, Inc., completed the private placement of 64,520 shares of cumulative trust preferred securities (Preferred Securities) with a liquidation preference of $100 per security. Each security can be converted into five shares of Class A Common Stock at the option of the holder. The proceeds of the offering were loaned to Republic Bancorp, Inc. in exchange for subordinated debentures representing the sole assets of the trust with terms that are similar to the Preferred Securities. Distributions on the securities are payable quarterly at the annual rate of 8.5% of the liquidation preference and are included in interest expense in the consolidated financial statements. Republic undertook the issuance of these securities to enhance its regulatory capital position. These securities are considered as Tier I capital under current regulatory guidelines. The Preferred Securities are subject to mandatory redemption, in whole or in part, upon repayment of the subordinated debentures at maturity or their earlier redemption at the liquidation preference. The subordinated debentures are redeemable prior to the maturity date of April 1, 2027 at the option of Republic on or after April 1, 2002, or upon the occurrence of specific events, defined within the trust indenture. Republic has the option to defer distributions on the subordinated debentures from time to time for a period not to exceed 20 consecutive quarters.
9. EARNINGS PER SHARE A reconciliation of the combined Class A and B Common Stock numerators and denominators of the earnings per share and earnings per share assuming dilution computations is as follows: <TABLE> <CAPTION> Three Months Ended March 31, 1998 1997 <S> <C> <C> Earnings Per Share Net Income $ 5,524 $ 1,880 Less: Dividends declared on preferred stock (106) ------------ ----------- Net Income available to common shares outstanding $ 5,524 $ 1,774 ============ ========== Weighted average shares outstanding 7,479 7,222 ============ ========== </TABLE> <TABLE> <CAPTION> Three Months Ended March 31, 1998 1997 Earnings Per Share Assuming Dilution <S> <C> <C> Net Income $ 5,524 $ 1,880 Less: Dividends declared on preferred stock (106) Add: Interest expense, net of tax benefit, on assumed conversion of guaranteed preferred beneficial interests in Republic's subordinated debentures 90 Net Income available to common shareholder assuming conversion $ 5,614 $ 1,774 ============ ============ Weighted average shares outstanding 7,479 7,222 Add dilutive effects of assumed conversion and exercise: Convertible guaranteed preferred beneficial interest in Republic's subordinated debentures 323 Stock options 147 90 ------------ ------------ Weighted average shares and dilutive potential shares outstanding 7,949 7,312 ============ ============ </TABLE> The difference in earnings per share between the two classes of common stock result solely from the dividend premium paid to Class A over Class B Common Stock.
PART 1 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL Republic, headquartered in Louisville, Kentucky, was incorporated on January 2, 1974. The Bank is a commercial banking and trust corporation organized and chartered under the laws of the Commonwealth of Kentucky. The Bank is also headquartered in Louisville, Kentucky and provides banking services through seventeen banking centers throughout Kentucky. The Bank's activities include the acceptance of deposits for checking, savings and time deposit accounts, making secured and unsecured loans, investing in securities and trust services. The Bank's lending services include the origination of real estate, commercial and consumer loans. Operating revenues are derived primarily from interest and fees on domestic real estate, commercial and consumer loans, and from interest on securities of the United States Government and Agencies, states, and municipalities. Regulators for Republic include the Federal Deposit Insurance Corporation (FDIC), Federal Reserve Bank and the Kentucky Department of Financial Institutions. DISPOSITION OF ASSETS During 1997, Republic elected to focus its resources on its North Central and Central Kentucky markets. Consistent with this new focus, Republic sold its banking centers in the Western Kentucky cities of Murray, Benton, Paducah, and Mayfield. The Murray, Benton and Paducah sales were closed in 1997. During the first quarter of 1998, Republic completed the sale of deposits and fixed assets at the Mayfield banking center. Republic realized a pre-tax gain of approximately $4.1 million from the Mayfield banking center sale which was completed during January, 1998. This sale was comprised of approximately $65.7 million in deposits and certain other fixed assets. Republic retained substantially all of its Mayfield banking center loan portfolio. The Mayfield transaction represented the final Western Kentucky banking center sale. COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 1998 AND DECEMBER 31, 1997 Republic's total assets increased slightly in the first quarter of 1998 from $1.05 billion at December 31, 1997 to $1.1 billion at March 31, 1998. Overall loan origination volume has continued to be strong and charge-offs have continued to moderate. Republic was also able to substantially replace the sold Mayfield deposits with additional deposit growth from its retail operations. Cash and cash equivalents. Cash and cash equivalents increased from $24.5 million at December 31, 1997 to $51.0 million at March 31, 1998. This increase was primarily comprised of funds generated by core retail deposits and other borrowed funds. Cash and due from banks decreased $3.2 million, while federal funds sold and securities purchased under agreements to resell totaled $29.7 million. This $29.7 million is primarily composed of overnight reverse repurchase agreements totaling $20.0 million with the remaining balance in overnight fed funds sold. The overnight reverse repurchase agreements provided the Bank with additional collateral which can be pledged against short-term borrowings. Securities available for sale. Securities available for sale increased from $93.8 million at December 31, 1997 to $134.4 million at March 31, 1998. Republic elected to invest funds from core retail deposits and maturing securities previously held to maturity into securities available for sale in order to provide for more flexibility of administration of the investment portfolio under changing market conditions.
Securities to be held to maturity. Securities to be held to maturity decreased from $98.5 million at December 31, 1997 to $80.1 million at March 31, 1998. The decrease was due to management's decision to reinvest maturing securities into securities available for sale. Securities to be held to maturity consists primarily of U.S. Treasury and U.S. Government Agencies with a range of maturities, none of which exceed 5.5 years. Loans. Loans decreased from $794.9 million at December 31, 1997 to $783.5 million at March 31, 1998. The decrease in loans is primarily due to paydowns in the Bank's unsecured consumer loan portfolio. Consumer loans decreased from $82.0 million at December 31, 1997 to $74.0 million at March 31, 1998. Approximately 44.6% of loans in the consumer portfolio are unsecured. The unsecured consumer portfolio includes the "All Purpose" and "Pre-Approved" loan programs. Republic's "All Purpose" loans , with total outstandings of $11.9 million at March 31, 1998 and $13.4 million at December 31, 1997, are originated through Republic's banking centers. "Pre-Approved Loans", with total outstandings of $21.2 million at March 31, 1998 and $24.9 million at December 31, 1997, were originated through direct mail, targeting customers both in and outside of Republic's traditional markets. Management plans to continue to allow the outstanding "All Purpose" and "Pre-Approved" portfolios to reduce in the near term. While the residential real estate portfolio remained flat from December 31, 1997, overall loan origination volume remains strong. The majority of Republic's new fixed rate residential real estate originations are being sold into the secondary market. Allowance and Provision for Loan Losses. The allowance for loan losses remained constant at $8.2 million from December 31, 1997 to March 31, 1998. Republic's allowance to total loan ratio was 1.04% at March 31, 1998 compared to 1.02% at December 31, 1997. The provision for loan losses was $643,000 for the three months ended March 31, 1998, compared to $1.3 million for the three months ended March 31, 1997. Net charge-offs decreased significantly from first quarter 1997 to first quarter 1998. Republic's unsecured consumer loan portfolio accounted for 85% of total charge-offs during the first quarter of 1998 and 96% for the first quarter of 1997. Management anticipates that charge-offs in the unsecured loan portfolio may continue at recent levels in the near future and believes, based on information presently available, that it has adequately provided for those losses at March 31, 1998.
Table 1 below depicts the allowance activity by loan type for the three months ended March 31, 1998 and 1997. Table 1 - Summary of Loan Loss Experience <TABLE> <CAPTION> Three Months Ended March 31, 1998 1997 (in thousands) <S> <C> <C> Allowance for loan losses: Balance-beginning of period $ 8,176 $ 6,241 Charge-offs: Real Estate (19) (22) Commercial (38) Consumer (683) (1,375) --------- -------- Total (702) (1,435) --------- -------- Recoveries: Real Estate 3 18 Commercial 4 0 Consumer 110 159 --------- -------- Total 117 177 --------- -------- Net charge-offs (585) (1,258) Provision for loan losses 643 1,298 --------- -------- Allowance for loan losses: Balance-end of period $ 8,234 $ 6,281 ========= ======== </TABLE> Mortgage loans held for sale. Mortgage loans held for sale increased from $10.0 million at December 31, 1997 to $26.1 million at March 31, 1998. Republic's origination of mortgage loans for sale increased from $41 million during the quarter ended December 31, 1997 to $73 million for the quarter ended March 31, 1998. The increase in origination loan volume was the result of favorable long-term interest rates and an increase in mortgage loan origination staff. Republic anticipates that the volume of secondary market originations will continue in the near term if long-term interest rates remain at current levels. Also during the first quarter of 1998, Republic securitized approximately $6 million in 15 year fixed rate originations. These securities were subsequently sold for a modest gain during April of 1998. Deposits. Total deposits decreased marginally to $728.0 million at March 31, 1998 compared to $731.6 million at December 31, 1997. The decrease in deposits was primarily the result of the sale of deposits totaling $65.7 million at the Mayfield banking center. This decrease was offset by solid growth in retail deposits. Republic's growth in retail deposits was the result of management's emphasis on funds management. Republic has hired a cash management specialist as well as designated a senior officer to focus on deposit growth initiatives during 1998. Management plans to continue its deposit gathering initiatives through aggressive pricing strategies and new products. Other borrowed funds. Other borrowed funds increased from $124.4 million at December 31, 1997 to $179.1 million at March 31, 1998. During the first quarter of 1998 Republic borrowed $60 million from the FHLB to fund the sale of deposits in Mayfield.
RESULTS OF OPERATIONS Overview. Republic reported net income of $5.5 million, or $.74 per Class A common share and $.73 per Class B common share, for the first quarter of 1998. Earnings for the first quarter 1998 produced an annualized return on average assets of 1.29% and a return on average stockholders' equity of 19.28%, compared to returns of .69% and 12.64%, respectively, for the comparable period in 1997. Excluding the one-time gain on sale of deposits, Republic's net income after tax for the first quarter of 1998 would have been $2.9 million with a return on average assets of 1.05% and a return on average stockholders' equity of 15.66%. Net Interest Income. For the first quarter 1998, net interest income increased a modest $363,000 over the $10.0 million attained during the first quarter of 1997. During the first quarter 1998, average interest-earning assets were $1.1 billion, an increase of $9.9 million over first quarter 1997. The yield on average interest-earning assets decreased from 8.63% during first quarter of 1997 to 8.62% during first quarter of 1998. As a result of these small changes, interest income was effectively unchanged. Total average interest bearing liabilities decreased from $948 million in the first quarter of 1997 to $935 million in the first quarter of 1998. This reduction in interest bearing liabilities was primarily due to the sale of deposits from Republic's Western Kentucky banking centers. The cost of average interest-bearing liabilities decreased slightly from 5.32% during first quarter of 1997 to 5.31% in the first quarter of 1998. Overall, the net interest rate spread remained unchanged at 3.31% from the first quarter of 1997 compared to the first quarter of 1998. The Bank's net interest margin increased from 3.82% in first quarter 1997 to 3.92% in first quarter 1998. The increase in the net interest margin occurred because of an increase in average earning assets over the prior year while average interest bearing liabilities decreased from the prior year. Also as a result of the gains realized on the sale of assets during 1997 and the first quarter of 1998, Republic was able to fund a greater portion of interest earning assets through equity. The changes in average earning assets and average interest bearing liabilities led to an overall increase in net interest income and the corresponding increase in the net interest margin percentage. Tables 2 and 3 provide detailed information as to average balance, interest income/expense, and rates by major balance sheet category for the three months ended March 31, 1998 and 1997.
<TABLE> <CAPTION> Table 2 - Average Balance Sheet Rates for March 31, 1998 and 1997 (dollars in thousands) 1998 1997 ---- ---- Average Average Average Average ASSETS Balance Interest Rate Balance Interest Rate ------- -------- ---- ------- -------- ---- Earning Assets: <S> <C> <C> <C> <C> <C> <C> U.S. Treasury and U.S. Government Agency Securities $157,199 $2,307 5.87% $ 233,754 $ 3,366 5.76% State and Political Subdivision Securities 4,263 92 8.63% 4,520 96 8.50% Other Investments 10,166 188 7.40% 6,431 111 6.90% Mortgage-Backed Securities 46,773 721 6.17% 656 9 5.49% Federal Funds Sold and Securities Purchased Under Agreements to Resell 24,783 354 5.71% 15,258 213 5.58% Total Loans and Fees 814,254 19,123 9.39% 786,882 18,815 9.56% ------- ------ ------- ------ Total Earning Assets 1,057,438 22,785 8.62% 1,047,501 22,610 8.63% --------- ------ --------- ------ Less: Allowance for Loan Losses (8,221) (6,256) Non-Earning Assets: Cash and Due From Banks 21,199 24,299 Bank Premises and Equipment, Net 12,795 17,731 Other Assets 12,410 11,892 ------ ------ Total Assets $ 1,095,621 $ 1,095,167 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Interest Bearing Liabilities: Transaction Accounts $ 94,303 $ 762 3.23% $ 136,416 $ 1,175 3.45% Money Market Accounts 79,333 986 4.97% 39,935 468 4.69% Individual Retirement Accounts 22,739 339 5.96% 36,430 531 5.83% Certificates of Deposit and Other Time Deposits 438,325 6,445 5.88% 511,188 7,490 5.86% Repurchase Agreements and Other Borrowings 300,799 3,883 5.16% 223,884 2,939 5.25% ------- ----- ------- ----- Total Interest Bearing Liabilities 935,499 12,415 5.31% 947,853 12,603 5.32% Non-Interest Bearing Liabilities: Non-Interest Bearing Deposits 72,663 72,189 Other Liabilities 14,157 15,643 Stockholders' Equity 73,302 59,482 ------ ------ Total Liabilities and Stockholders' Equity $ 1,095,621 $ 1,095,167 =========== =========== Net Interest Income $10,370 $ 10,007 ======= ======== Net Interest Spread 3.31% 3.31% ===== ===== Net Interest Margin 3.92% 3.82% ===== ===== </TABLE> For the purposes of these calculations, non-accruing loans are included in the quarterly average loan amounts outstanding.
<TABLE> <CAPTION> The following table presents the extent to which changes in interest rates and changes in the volume of interest earning assets and interest bearing liabilities have affected Republic's interest income and interest expense during the periods indicated. Information is provided in each category with respect to (i) changes attributable to changes in volume (changes in volume multiplied by prior rate), (ii) changes attributable to changes in rate (changes in rate multiplied by old volume), and (iii) the net change. The changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate. Table 3 - Volume/Rate Variance Analysis (in thousands) Three Months Ended March 31, 1998 Compared to Three Months Ended March 31, 1997 Increase/(Decrease) due to Total Net Change Volume Rate <S> <C> <C> <C> Interest Income (1): U.S. Treasury and Government Agency Securities $ (1,059) $ (1,102) $ 43 State and Political Subdivision Securities (4) (5) 1 Other Investments 77 64 13 Mortgage-Backed Securities 712 633 79 Federal Funds Sold and Securities Purchased Under Agreements to Resell 141 133 8 Total Loans and Fees (2) 308 654 (346) --- --- --- Net Change in Interest Income 175 377 (202) --- --- --- Interest Expense: Interest Bearing Transaction Accounts (413) (363) (50) Money Market Accounts 518 462 56 Individual Retirement Accounts (192) (200) 8 Certificates of Deposit and Other Time Deposits (1,045) (1,068) 23 Repurchase Agreements and Other Borrowings 944 1,010 (66) --- ----- --- Net Change in Interest Expense (188) (159) (29) --- --- --- Increase in Net Interest Income $ 363 $ 536 $ (173) ===== ===== ======= </TABLE> (1) Interest income for loans on non-accrual status have been included in Interest Income. (2) The amount of fees in interest on loans was $473,000 and $163,000 for the years ended March 31, 1998 and 1997, respectively.
Non-Interest Income. Non-interest income was $6.9 million during first quarter 1998, up from $2.1 million during first quarter of 1997. Excluding the one-time gain on sale of deposits, non-interest income increased $700,000 to $2.8 million. This increase was principally due to gains recorded on the sale of investment securities as well as an increase in gain on sale of loans over the first quarter of 1997. The gain on sale of investment securities resulted from Republic's realization of an increase in the market value of a portion of the Bank's available for sale securities due to a lower interest rate environment at the time of sale. Other service charges and fees increased $87,000 to $397,000 due to increased volume associated with the Republic's participation in a rapid tax refund joint venture. Revenues generated from this joint venture are primarily realized only during the tax filing season comprised of the first quarter and to a lessor extent the second quarter of the year. Income from mortgage banking, also a component of non-interest income, includes proceeds from the sale of loans in the secondary market and servicing income. Gain on sale of loans increased $728,000 in first quarter 1998 from first quarter 1997. Republic's net gain on sale of loans increased due to continued strong mortgage loan demand. Loan servicing income declined slightly during first quarter 1998 compared to the comparable period in 1997. The decrease was attributable to a decline in the servicing portfolio due to normal payoff activity and the sale of new loan originations into the secondary market with servicing released. Non-Interest Expense. Total non-interest expense increased modestly from $8.0 million in first quarter 1997, compared to $8.1 million for first quarter 1998. The increase for the three months ended March 31, 1998 was primarily attributable to costs associated with Republic's banking center expansion strategies. Excluding the one-time gain on sale of deposits, Republic's non-interest expense ratio (non-interest expense divided by the sum of net interest income and non-interest income) was 61% in the first quarter 1998 compared to 66% for the comparable period in 1997. Republic's staffing level declined to 406 full-time equivalent employees (FTE's) at March 31, 1998, compared to 439 FTE's at March 31, 1997. The decrease in staffing was primarily due to the sale of the Western Kentucky banking centers. While total FTE's decreased, salary and employee benefit expense increased 10.5% for the first quarter 1998 over first quarter 1997. The increased payroll cost is primarily attributable to the addition of more highly compensated technical staff and annual merit increases. Occupancy and equipment expense decreased from $2.0 million in first quarter 1997 to $1.9 million for the comparable period in 1998. The decrease was primarily due to the sale of Western Kentucky banking centers. ASSET QUALITY Loans, including impaired loans under SFAS 114 and excluding consumer loans, are placed on non-accrual status when they become past due 90 days or more as to principal or interest, unless they are adequately secured and in the process of collection. When loans are placed on non-accrual status, all unpaid accrued interest is reversed. These loans remain on non-accrual status until the borrower demonstrates the ability to remain current or the loan is deemed uncollectible and is charged off. Consumer loans are not placed on non-accrual status but are reviewed periodically and charged off when they reach 120 days past due and are deemed uncollectible. At March 31, 1998, Republic had $587,000 in consumer loans 90 days or more past due compared to $497,000 at December 31, 1997.
Table 4 provides information related to non-performing assets and loans 90 days or more past-due. Total non-performing assets increased slightly from December 31, 1997 to March 31, 1998. <TABLE> <CAPTION> Table 4 - Non-Performing Loans March 31, December 31, (dollars in thousands) 1998 (1) 1997 (1) <S> <C> <C> Loans on non-accrual status (2) $ 2,537 $ 2,676 Loans past due 90 days or more 5,084 4,459 --------- --------- Total non-performing loans 7,621 7,135 Other real estate owned 504 22 --------- --------- Total non-performing assets $ 8,125 $ 7,167 ========= ========= Percentage of non-performing loans to total loans .96% .89% Percentage of non-performing assets to total loans 1.02% .89% </TABLE> (1) The table is exclusive of impaired loans which remained on accrual status. (2) Interest income that would have been earned and received on non-accrual loans was not material. Republic defines impaired loans to be those commercial real estate and commercial loans greater than $499,999 that management has classified as doubtful (collection of all amounts due is highly questionable or improbable) or loss (all or a portion of the loan has been written off or a specific allowance for loss has been provided). Republic's policy is to charge off all or that portion of its investment in an impaired loan upon a determination it is probable the full amount will not be collected. Non-performing loans increased from $7.1 million at December 31, 1997 to $7.6 million at March 31, 1998. Non-performing assets increased from $7.2 million at December 31, 1997 to $8.1 million at March 31, 1998. This increase is largely comprised of loans 90 days or more past due and real estate owned, both of which are primarily secured by 1-4 family residential loans. Management does not consider the increase in non-performing assets to be material. LIQUIDITY Republic's objectives include providing consistent earnings, and preserving an adequate liquidity position. Asset/liability management control is designed to ensure safety and soundness, maintain liquidity and regulatory capital standards, and achieve an acceptable net interest margin. Republic continues to experience strong loan demand and management continues to monitor interest rate and liquidity risk while implementing appropriate funding and balance sheet strategies. Republic maintains sufficient liquidity in order to fund loan demand and deposit withdrawals. Liquidity is managed by retaining sufficient liquid assets in the form of investment securities and core deposits to meet funding requirements. Additional funding and cash flows can also be realized from paydowns within the loan portfolio. Republic has also established lines of credit with other financial institutions, the FHLB and brokerage firms. While Republic utilizes a variety of funding sources in order to meet its liquidity requirements, the utilization of FHLB borrowings remains a material component of management's balance sheet strategies.
CAPITAL The Bank intends to maintain a capital position that meets the regulatory definition, as defined by the FDIC, of a "well capitalized" institution. Table 5 below indicates the capital ratios at March 31, 1998. <TABLE> <CAPTION> Table 5 - Regulatory Capital Ratios Minimum Requirement Minimum To Be Well Requirement Capitalized For Capital Under Prompt Adequacy Corrective Actual Purposes Action Provisions Amount Ratio Amount Ratio Amount Ratio (dollars in thousands) As of March 31, 1998 <S> <C> <C> <C> <C> <C> <C> Total Risk Based Capital (to Risk Weighted Assets) Consolidated $ 88,304 13.03% $ 52,647 8% $ 65,808 10% Bank only $ 88,128 12.65% $ 52,716 8% $ 65,895 10% Tier I Capital (to Risk Weighted Assets) Consolidated $ 80,070 11.82% $ 26,323 4% $ 39,485 6% Bank only $ 79,894 11.46% $ 23,558 4% $ 39,537 6% Tier I Leverage Capital (to Average Assets) Consolidated $ 80,070 7.31% $ 44,725 4% $ 55,906 5% Bank only $ 79,894 7.29% $ 43,885 4% $ 54,856 5% </TABLE> Consolidated capital increased from $68.4 million at December 31, 1997 to $73.4 million at March 31, 1998, a 7.4% increase. The increase was primarily attributable to the gain on sale of the deposits at the Mayfield banking center, supported by core earnings. Republic currently exceeds the minimum regulatory requirements for a well-capitalized institution. Kentucky banking regulations limit the amount of dividends that may be paid to Republic by the Bank without prior approval of the Bank's regulatory agency. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the Bank's current year's net income, as defined in the regulations, combined with the retained net income of the preceding two years, less any dividends declared during those periods. At March 31, 1998, the Bank had $13 million of retained earnings available for payment of dividends. Asset/Liability Management and Market Risk Asset/liability management control is designed to ensure safety and soundness, maintain liquidity and regulatory capital standards, and achieve acceptable net interest income. Management considers interest rate risk to be Republic's most significant market risk. Interest rate risk is the exposure to adverse changes in the net interest income as a result of market fluctuations in interest rates. Management regularly monitors interest rate risk in relation to prospective market and business conditions. The Bank's Board of Directors sets policy guidelines establishing maximum limits on the Bank's interest rate risk exposure. Republic's management monitors and adjusts exposure to interest rate fluctuations as influenced by the Bank's loan and deposit portfolios.
Republic uses an earnings simulation model to analyze net interest income sensitivity. Potential changes in market interest rates and their subsequent effect on interest income is then evaluated. The model projects the effect of instantaneous movements in interest rates of both 100 and 200 basis points. Assumptions based on the historical behavior of Republic's deposit rates and balances in relation to changes in interest rates are also incorporated into the model. These assumptions are inherently uncertain and, as a result, the model cannot precisely measure net interest income or precisely predict the impact of fluctuations in market interest rates on net interest income. Actual results will differ from the model's simulated results due to timing, magnitude, and frequency of interest rate changes as well as changes in market conditions and the application of various management strategies. Interest rate risk management focuses on maintaining acceptable net interest income within Board approved policy limits. Republic's Asset/Liability Management Committee monitors and manages interest rate risk to maintain an acceptable level of change to net interest income resulting from market interest rate changes. Republic's Board approved policy established for interest rate risk is stated in terms of the change in net interest income given a 100 and 200 basis point immediate and sustained increase or decrease in market interest rates. The current limits approved by the Board are plus or minus 8% for a 100 basis point change and plus or minus 12% for a 200 basis point movement. The interest rate sensitivity profile of Republic at any point in time will be effected by a number of factors. These factors include the mix of interest sensitive assets and liabilities as well as their relative pricing schedules. Year 2000 The Bank has continued to actively work toward completion of its Year 2000 goals and objectives. Republic has remained on its implementation schedule during the first quarter of 1998 and expects to complete remediation phase activities no later than year end, 1998. Republic has obtained preliminary representations from its essential software vendors that their products will be Year 2000 compliant. Management projects that the cost of Year 2000 remediation will be in a range of $1.2 million to $1.8 million, the majority of which will be capitalized over a three year period. Year 2000 expenses are subject to change and could vary from current estimates if the final requirements for Year 2000 readiness exceed management's expectations. New Accounting Pronouncement See discussion in Note 1 to financial statements. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information for this item is incorporated by reference to the Asset/Liability Management and Market Risks section of Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
PART II - OTHER INFORMATION Item 2. Changes in Securities and Use of Proceeds On or about January 9, 1998, Republic issued 5,000 shares of Class A common stock to a certain employee upon the exercise of stock options which had been granted that employee under a compensatory stock option plan. The aggregate exercise price paid for the shares issued upon exercise of the option was $11.94. (The exemption from registration relied on by Republic was Section 4 (2) of the Securities Act of 1933. The purchaser was a key employee who had access to material information concerning Republic.) Item 4. Submission of Matters to a Vote of Securities Holders. A regularly scheduled annual meeting of the stockholders of Republic was held on January 12, 1998. Proxies were solicited by Republic's Board of Directors for matters to be voted on at the annual meeting. The following items were voted upon and approved at the annual meeting: Setting the Number of Directors: A proposal to set the number of directors for the Board of Directors of the Corporation at nine (9) was approved by a vote of the majority of the shares of the Corporation's common stock represented at the meeting; 14,688,972 votes were cast in favor of the proposal; 0 shares were voted against; 0 shares were withheld; and 0 shares abstained. Election of Directors: At the annual meeting, shareholders voted upon the election of directors. All nominees were elected by vote of the shareholders. Holders of 5,127,780 shares, representing 12,745,616 votes of the common stock were present in person at the meeting and 1,943,356 votes were represented by proxy for a total of 14,688,972, equaling 80% of the total outstanding common stock. The voting results for each nominee were as follows: <TABLE> <CAPTION> Votes Votes Votes Non- Nominee For Against Withheld Votes <S> <C> <C> <C> <C> A. Wallace Grafton, Jr. 14,688,972 0 0 0 Samuel G. Swope 14,688,972 0 0 0 Larry M. Hayes 14,688,972 0 0 0 D. Harry Jones 14,688,972 0 0 0 E. William Petter, Jr. 14,688,972 0 0 0 R. Wayne Stratton 14,688,972 0 0 0 A. Scott Trager 14,688,972 0 0 0 Bernard M. Trager 14,688,972 0 0 0 Steven E. Trager 14,688,972 0 0 0 </TABLE>
Item 6. Exhibits and Reports on Form 8-K A. The exhibits required by Item 601 of Regulation S-K are attached to and listed in the Exhibit Index on page 28. B. Reports on Form 8-K: Republic Bancorp, Inc. fourth quarter, 1997. During the first quarter of 1998, Republic filed an amendment to the report on Form 8-K, dated November 7, 1997, to report, under Item 2 of that form, the Murray, Benton, Paducah, and Mayfield, Kentucky, branch sale transactions and to file, under Item 7 of that form, pro forma financial statements reflecting the sale transactions.
SIGNATURES 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. Republic Bancorp, Inc. (Registrant) Principal Executive Officer: Date: 05/15/98 /s/ Steven E. Trager ---------------- ----------------------------------- Steven E. Trager Chief Executive Officer Principal Financial Officer: Date: 05/15/98 /s/ Mark A. Vogt ---------------- ----------------------------------- Mark A. Vogt Chief Financial Officer
EXHIBIT INDEX Exhibit Description Page 10.10 Lease at 601 West Market Street, Louisville 29 10.11 Lease at 2801 Bardstown Road, Louisville 46 10.12 Lease at 661 South Hurstbourne Parkway, Louisville 52 10.13 Lease at 9600 Brownsboro Road, Louisville 77 11 Statement Regarding Computation of Per Share Earnings 89 27 Financial Data Schedule 90