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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
[ ] Act of 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
OR
Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
FOR THE TRANSITION PERIOD FROM ______ TO ______
COMMISSION FILE NUMBER: 0-24649
REPUBLIC BANCORP, INC.
(Exact name of registrant as specified in its charter)
Kentucky 61-0862051
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
601 W. Market Street, Louisville, Kentucky 40202
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (502) 584-3600
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
- ------------------- -----------------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock
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(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 (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [ ]
Indicate by check mark if the 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.
The aggregate market value of the voting and non-voting common stock held by
non-affiliates of the registrant as of March 15, 2001 was approximately
$57,357,000 (for purposes of this calculation, the market value of the Class B
Common Stock was based on the market value of the Class A Common Stock into
which it is convertible).
The number of shares outstanding of the registrant's Class A Common Stock and
Class B Common Stock as of March 15, 2001 was 14,081,702 and 2,086,129,
respectively.
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Annual Report to Shareholders for the year ended
December 31, 2000 are incorporated by reference into Parts I and II.
Portions of Registrant's Proxy Statement for the Annual Meeting of Shareholders
to be held April 18, 2001 are incorporated by reference into Part III.
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TABLE OF CONTENTS
PART I
1. Business 4
2. Properties 13
3. Legal Proceedings 14
4. Submission of Matters to a Vote of Security Holders 14
PART II
5. Market for Registrant's Common Equity And Related
Security Holder Matters 14
6. Selected Financial Data 14
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 14
7A. Quantitative and Qualitative Disclosures about Market Risk 15
8. Financial Statements and Supplementary Data 15
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 15
PART III
10. Directors and Executive Officers of the Registrant 15
11. Executive Compensation 15
12. Security Ownership of Certain Beneficial Owners and Management 15
13. Certain Relationships and Related Transactions 19
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 20
Signatures 21
CAUTIONARY STATEMENT
This Annual Report on Form 10-K contains and incorporates by reference
statements relating to future results of Republic Bancorp, Inc. that are
considered "forward-looking" within the meaning of the Private Securities
Litigation and Reform Act of 1995. These statements relate to, among other
things, expectations concerning loan demand, growth and performance, simulated
changes in interest rates and the adequacy of our allowance for loan losses.
Actual results may differ materially from those expressed or implied as a result
of certain risks and uncertainties, including, but not limited to, changes in
political and economic conditions, interest rate fluctuations, competitive
product and pricing pressures within our markets, equity and fixed income market
fluctuations, personal and corporate customers' bankruptcies, inflation,
acquisitions and integrations of acquired businesses, technological changes,
changes in law and regulations (including changes resulting from the
Gramm-Leach-Bliley Act enacted in November 1999), changes in fiscal, monetary,
regulatory and tax policies, monetary fluctuations, success in gaining
regulatory approvals when required as well as other risks and uncertainties
reported from time to time in our filings with the Securities and Exchange
Commission.
Please Note:
AS USED IN THIS REPORT, THE TERMS "REPUBLIC", THE "COMPANY", "WE", "OUR" AND
"US" REFER TO REPUBLIC BANCORP, INC., AND, WHERE THE CONTEXT REQUIRES, REPUBLIC
BANCORP, INC. AND ITS SUBSIDIARIES; AND THE TERM THE "BANK" REFERS TO OUR
SUBSIDIARY, REPUBLIC BANK & TRUST COMPANY.
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PART I
ITEM 1. BUSINESS.
Republic Bancorp, Inc. is a financial holding company headquartered in
Louisville, Kentucky. Republic's principal subsidiary is Republic Bank & Trust
Company, a Kentucky banking corporation. Incorporated in Kentucky on January 2,
1974, Republic became a bank holding company when the Bank became authorized to
conduct a commercial banking business in Kentucky in 1981.
The principal business of Republic is directing, planning and coordinating the
business activities of the Bank. The financial condition and results of
operations of Republic are primarily dependent upon the operations of the Bank.
At December 31, 2000, Republic had total assets of $1.5 billion, total deposits
of $864 million and total stockholders' equity of $117 million. Based on total
assets as of December 31, 2000, Republic ranked as the 4th largest independent
bank holding company headquartered in Kentucky. The executive offices of
Republic are located at 601 West Market Street, Louisville, Kentucky 40202,
telephone number (502) 584-3600. The Company's Website address is
www.republicbank.com.
GENERAL BUSINESS OVERVIEW
As of March 1, 2001, Republic had a total of 21 banking centers in seven
Kentucky communities and a loan production office in Clarksville, Indiana.
Republic plans to charter a new bank in the state of Indiana during the second
quarter of 2001. The new bank will utilize the loan production office in
Clarksville as its corporate headquarters and will be capitalized with a $5
million contribution by Republic Bancorp. Republic's two primary market areas
are located in North Central and Central Kentucky. The North Central Kentucky
market includes the Louisville metropolitan area, the largest city in Kentucky,
where Republic is headquartered and has 11 banking centers. Republic's Central
Kentucky market includes ten banking centers in the following Kentucky cities:
Bowling Green (1); Elizabethtown (1); Frankfort (2); Lexington, the second
largest city in Kentucky (4); Owensboro (1); and Shelbyville (1).
Republic has developed a super community banking network, with most of its
banking centers located either in separate communities or portions of urban
areas that represent distinct communities. Each of Republic's banking centers is
managed by one or more officers with the authority to make pricing and loan
decisions within Company policies and guidelines.
Republic continues to seek and evaluate additional expansion opportunities,
either through the establishment of de novo banking centers and/or through
acquisitions of existing institutions in the financial services industry and
ancillary nonbanking businesses. The Company intends to continue to consider
various strategic acquisitions of banks, banking assets or financial services
entities related to banking in those geographical areas that management believes
would complement and increase Republic's existing business lines, or expansion
in new market areas or product lines that management determines would be in the
best interest of the Company and its shareholders.
The Company has historically extended credit and provided general banking
services through its banking center network to individuals, professionals, and
businesses. Over the past several years the Company began to seek new lines of
business to diversify its asset mix and further enhance its profitability. While
each new line of business reflects the Company's efforts to enrich its asset
mix, each of these lines of business is an outgrowth of the basic community
banking concepts that the Company has traditionally engaged. The Company
principally markets its products and services through the following delivery
channels:
MORTGAGE LENDING. The Company utilizes its banking centers and commissioned
originators to offer a complete line of single family residential mortgage
products. The Company generally retains mortgage loans with variable rates or
adjustable rates with up to 10 year fixed rate terms, and sells its longer term
fixed rate loans into the secondary market. Once closed, the secondary market
loans are sold without recourse to institutional investors. Generally, fixed
rate loans in process are covered by forward commitments to these investors,
thus limiting Republic's interest rate risk.
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Republic does not retain the servicing on the majority of its loans sold in the
secondary market, a practice dating back to 1995. Management's decision to
retain or release servicing rights is largely dependent upon market pricing
considerations. When administering loans with the servicing retained by the
Company, the responsibility of collecting principal and interest payments,
escrowing for taxes and insurance and remitting payments to the secondary market
investors remains with Republic. A fee is received by Republic for performing
these standard servicing functions.
COMMERCIAL LENDING AND LEASING. In 1997, the Company established a separate
commercial lending unit as an outgrowth of the Company's historical business of
originating loans for small and medium-sized businesses from its various
locations. Commercial loans are primarily real estate secured and are generated
at banking centers primarily in the Company's market areas. The Company makes
commercial loans to a variety of industries. The Company intends to expand this
business through focused calling programs, seeking to broaden relationships with
commercial clients with loan, deposit and cash management services.
PREFERRED CLIENT SERVICES. Republic has established long-standing relationships
with the medical communities in its primary markets. Special loan and deposit
products have been tailored to meet the needs of physicians and their practices.
Republic has the capacity to expand these specialized services to other
professional business groups.
CONSUMER LENDING. Consumer loans made by the Company include automobile loans,
home improvement and home equity loans, operating lines of credit, and personal
loans (both secured and unsecured). Consumer lending loan products, while
available, are not heavily promoted in Republic's markets.
SPECIALIZED LENDING. Republic has pursued specialized lending opportunities to
complement its traditional lending programs. One specialized product line
includes tax refund loans and checks produced by Refunds Now, a program
specializing in tax refund anticipation services. Republic began offering these
services through a joint venture arrangement with Refunds Now, Inc. In October
1998, the Company acquired Refunds Now, Inc. as a subsidiary, in a stock merger
transaction accounted for as a pooling of interests.
INTERNET BANKING. Republic continues to expand its market penetration and
service delivery by offering clients Internet banking services through
republicbank.com. Twenty-seven percent of the Bank's existing checking account
clients now utilize Republic's Internet banking services. Republicbank.com is
also available to clients outside of Kentucky and has over $74 million in
deposits from 48 states and the District of Columbia.
OTHER BANKING SERVICES. The Bank also provides investment management and trust
services and engages in life, long-term care and title insurance sales, item
processing, and other related financial institution lines of business. At
December 31, 2000, Republic had over $1 billion in trust assets under
administration.
Deposits are a key component to the Company's banking business, serving as a
source of funding for lending as well as increasing client account
relationships. Borrowings, principally from the Federal Home Loan Bank ("FHLB"),
and repurchase agreements, provide additional liquidity. Also, the Company's
investment securities, together with cash and cash equivalents, provide an
important source of liquidity. The Company uses its investments as collateral
for borrowings and to secure public fund deposits.
Republic's operating revenues are derived primarily from interest earned from
its loan and investment securities portfolios and fee income from loan, deposit
and other banking products. For information about Republic's loan loss reserve
and the allocation of the allowance for loan losses by loan type, see the
discussion under the sub-heading "Asset Quality" included on page 25 of
Republic's 2000 Annual Report to Shareholders, which is incorporated herein by
reference.
Information about Republic's business segments and nonbanking lines of business
is contained in Note 20 of the Consolidated Financial Statements on page 55 of
Republic's 2000 Annual Report to Shareholders, information which is incorporated
herein by reference.
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EMPLOYEES
As of December 31, 2000, the Bank had 498 employees of which 411 were full-time
and 87 part-time. None of the Bank's employees are subject to a collective
bargaining agreement, and neither Republic nor the Bank has ever experienced a
work stoppage.
COMPETITION
The Company actively competes with several local and regional commercial banks,
thrifts, credit unions and mortgage companies for deposits, loans and other
banking related financial services. There is intense competition in the Bank's
markets from other financial institutions as well as other "non-bank" companies
that engage in similar activities. Some of the Company's competitors are not
subject to the same degree of regulatory review and restrictions that apply to
the Bank. In addition, the Company must compete with much larger financial
institutions that have greater financial resources than the Company and, while
predominantly headquartered in other states, aggressively compete for market
share in Kentucky. These competitors attempt to gain market share through their
financial product mix, pricing strategies and banking center locations.
Legislative developments related to interstate branching and banking in general,
by providing large banking institutions easier access to a broader marketplace,
are creating more pressure on smaller financial institutions to consolidate. The
Company also competes with insurance companies, consumer finance companies,
investment banking firms, brokerage houses, mutual fund managers and investment
advisors. Retail establishments compete for loans by offering credit cards and
retail installment contracts for the purchase of goods and merchandise. It is
anticipated that competition from both bank and "non-bank" entities will
continue to remain strong in the near future.
SUPERVISION AND REGULATION
Republic and the Bank are subject to the policies of various regulatory
authorities. In particular, bank holding companies and their subsidiaries are
affected by the credit and monetary policies of the Federal Reserve Board.
Republic and the Bank are subject to numerous federal and state laws and
regulations affecting their business and also must undergo periodic examination
by federal and state financial institution examiners. The earnings of the Bank,
and the earnings of Republic, are affected not only by the laws and regulations
applicable to the banking business, but also by the policies and interpretations
of regulatory authorities.
The supervision and regulation of bank holding companies and their subsidiaries
is intended primarily for the protection of depositors, the deposit insurance
funds of the FDIC and the banking system as a whole, and not for the protection
of the bank holding company shareholders or creditors. The banking agencies have
broad enforcement power over bank holding companies and banks including the
power to impose substantial fines and other penalties for violations of laws and
regulations, to issue cease and desist or removal orders, to seek injunctions,
and publicly disclose such actions; and extensive authority to police unsafe or
unsound practices. In addition, Republic's nonbanking subsidiaries are also
subject to regulation by other agencies. The nonbank subsidiary engaged in
insurance activities is subject to regulation by the Kentucky Insurance
Department, which is the only state in which it currently conducts business.
The following description summarizes some of the laws to which the Company and
the Bank are subject. References herein to applicable statutes and regulations
are brief summaries thereof, do not purport to be complete, and are qualified in
their entirety by reference to such statutes and regulations. In addition, upon
the completion of its organization, which is expected to occur in the second
quarter of 2001, Republic's new Indiana bank subsidiary, and Republic, as its
holding company, will also be subject to supervision and regulation by the
Indiana Department of Financial Institutions.
THE COMPANY
The Company is a bank holding company that has elected the status of a financial
holding company under the BHCA, and it is subject to supervision, regulation and
examination by the Federal Reserve Board. The BHCA and other federal laws
subject bank holding companies to particular restrictions on the types of
activities in which
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they may engage, and to a range of supervisory requirements and activities,
including regulatory enforcement actions for violations of laws and regulations.
BANK ACQUISITIONS BY BANK AND FINANCIAL HOLDING COMPANIES. Republic is required
to obtain the prior approval of the Federal Reserve Board under the BHCA before
it may acquire all or substantially all of the assets of any bank, or ownership
or control of any voting shares of any bank, if after such acquisition it would
own or control, directly or indirectly, more than 5% of the voting shares of
such bank. In approving bank acquisitions by bank holding companies, the Federal
Reserve Board is required to consider the financial and managerial resources and
future prospects of the bank holding company and the banks concerned, the
convenience and needs of the communities to be served, and various competitive
factors. Consideration of convenience and needs issues includes the parties'
performance under the Community Reinvestment Act of 1977, as amended. Under the
Community Reinvestment Act, all financial institutions have a continuing and
affirmative obligation consistent with safe and sound operation to help meet the
credit needs of their entire communities, including low-to-moderate income
neighborhoods. By virtue of the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994, the geographic location of the bank is no longer a
factor. Under that Act, a well-capitalized and well-managed bank holding company
may acquire a bank located in any state, subject to certain deposit percentage
limitations and aging requirements.
IMPACT OF RECENT LEGISLATION. The activities permissible to bank holding
companies and their affiliates were substantially expanded by the
Gramm-Leach-Bliley Act which the President signed into law on November 12, 1999.
Effective March 11, 2000, the Gramm-Leach-Bliley Act removed Federal and state
law barriers that prevented banking organizations, such as the Company, from
affiliating with insurance organizations and securities firms. Republic has
elected and was subsequently approved for treatment as a financial holding
company and, as such, it may engage in financial activities (activities that are
financial in nature, such as insurance and securities underwriting and dealing
activities) and activities the Federal Reserve determines to be complementary to
financial activities which do not pose a substantial risk to the safety or
soundness of depository institutions or the financial system generally.
The Federal Reserve Board and Treasury Secretary determine what activities
qualify as financial in nature and have adopted regulations identifying certain
activites as financial in nature or incidental to financial activities, as well
as the procedures that allow a financial holding company to request the Federal
Reserve Board's approval to conduct an activity that is complementary to a
financial activity. A financial holding company is not required to obtain prior
Federal Reserve Board approval in order to engage in the financial activities
identified in the Gramm-Leach-Bliley Act, other than in connection with an
acquisition of a thrift. However, a financial holding company cannot commence,
or acquire, any new financial activities if one of its depository institution
subsidiaries receives a less than satisfactory CRA rating. In addition, if any
of its depository institution subsidiaries ceases being well capitalized or well
managed, and compliance is not achieved within 180 days, a financial holding
company may be forced, in effect, to cease conducting business as a financial
holding company by divesting either its nonbanking financial activities or its
banks.
Subject to certain exceptions, national banks are also able to engage in
financial activities through separate subsidiaries. As a general rule, financial
subsidiaries of national banks are not permitted to engage as principal in
underwriting insurance or issuing annuities, real estate development or
investment, merchant banking (for at least 5 years) or insurance company
portfolio activities in which financial holding companies may engage. Insured
state banks, such as the Bank, are permitted to control or hold an interest in a
financial subsidiary that engages in the same type of activities permissible for
national banks, subject to any restrictions imposed on a bank under the laws of
the state under which the bank is organized. Large banks (the top 50 to 100) may
be required to meet certain eligible debt investment grade rating requirements
in order to utilize financial subsidiaries to engage in financial activities.
Conducting financial activities through a bank subsidiary can impact capital
adequacy, and restrictions will apply to affiliate transactions between the bank
and its financial subsidiary.
Under the financial modernization legislation, the banking, securities and
insurance activities of financial organizations are functionally regulated by
the banking regulators, the Securities and Exchange Commission and state
securities regulators and organizations, and the state insurance regulators,
respectively. Consistent with this functional approach, and after May 11, 2001,
banks will no longer be excluded from the definition of a broker
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or a dealer under the Federal securities laws. Limited exemptions will be
retained for specific types of bank activities, including an exemption to permit
banks to continue to offer on-site third party brokerage services under certain
conditions. Banks advising registered investment companies will be required to
register as investment advisors, and only common trust funds that are employed
by banks solely as an aid to the administration of trusts, estates, or other
fiduciary accounts will be able to avoid the registration requirements imposed
on investment companies. The Gramm-Leach-Bliley Act includes consumer privacy
protections and CRA "sunshine" rules, "modernizes" various other banking related
statutes, permits mutual bank holding companies, and requires a number of
studies and reports to Congress.
SAFE AND SOUND BANKING PRACTICES. Bank holding companies are not permitted to
engage in unsafe and unsound banking practices. The Federal Reserve Board may
prohibit a bank holding company from engaging in an activity if it believes that
the transaction would constitute an unsafe or unsound practice or would violate
any law or regulation. The FDIC and the Kentucky Department of Financial
Institutions have similar authority with respect to the Bank.
SOURCE OF STRENGTH. Under Federal Reserve Board policy, a bank holding company
is expected to act as a source of financial strength to each of its banking
subsidiaries and to commit resources to their support. Such support may be
required at times when, absent this Federal Reserve Board policy, a holding
company may not be inclined to provide it. As noted below, a bank holding
company may also be required to guarantee the capital restoration plan of an
undercapitalized banking subsidiary.
THE BANK
The Bank is a Kentucky chartered commercial banking corporation, the deposits of
which are insured by the FDIC. The Bank is not a member of the Federal Reserve
System; the Bank is subject to supervision and regulation by the FDIC and the
Kentucky Department of Financial Institutions. Such supervision and regulation
subjects the Bank to special restrictions, requirements, potential enforcement
actions and periodic examination by the FDIC and the Kentucky Department of
Financial Institutions. Because the Federal Reserve Board regulates the bank
holding company parent of the Bank, the Federal Reserve Board also has
supervisory authority that directly affects the Bank.
The Kentucky banking statutes prescribe the permissible activities in which a
Kentucky bank may engage and where those activities may be conducted. These
statutes were amended during 2000 to add a "super-parity" provision. This
super-parity provision permits a well-rated Kentucky banking corporation (such
as the Bank) to engage in any banking activity in which a national or state bank
operating in any other state or a federal savings association meeting the
qualified thrift lender test and operating in any state could engage, provided
it first obtains a legal opinion specifying the statutory or regulatory
provisions that permit the activity.
BRANCHING. Kentucky law currently expressly permits a Kentucky chartered bank to
establish a branch office in any county in which the bank's principal office or
an existing branch is located, In reliance on the new "super-parity" provision
discussed above, the Kentucky Department of Financial Institutions is permitting
well-rated banks to open branches in counties in which they do not already have
a branch. In addition, a Kentucky chartered bank is permitted to combine with a
commonly controlled bank or thrift regardless of its location in Kentucky. The
Kentucky banking statutes also permit a Kentucky bank, with prior regulatory
approval, to engage in an interstate merger transaction, and thereby establish a
branch office outside of Kentucky. In any case, the transaction must also be
approved by the FDIC, which considers a number of factors, including financial
history, capital adequacy, earnings prospects, character of management, needs of
the community and consistency with corporate powers. An out-of-state bank is
permitted to establish branch offices in Kentucky by merging with a Kentucky
bank. De novo branching into Kentucky by an out-of-state bank is not permitted
by the Kentucky banking statutes.
The Kentucky General Assembly recently passed in the 2001 General Session, and
delivered to the Governor, amendments to the banking statutes that will
expressly permit branching statewide, and remove the restrictions on
acquisitions that are currently applicable to Kentucky banks that have not been
in operation for at least 5
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years. Similar amendments were adopted during the 2000 General Session, but were
not given effect as a result of the enactment of conflicting legislation.
RESTRICTIONS ON AFFILIATE TRANSACTIONS. Transactions between the Bank and its
nonbanking affiliates, including the Company, are subject to Section 23A of the
Federal Reserve Act. In general, Section 23A imposes limits on the amount of
such transactions, and also requires certain levels of collateral for loans to
affiliated parties. It also limits the amount of advances to third parties which
are collateralized by the securities or obligations of the Company or its
subsidiaries.
Affiliate transactions are also subject to Section 23B of the Federal Reserve
Act which generally requires that certain transactions between the Bank and its
affiliates be on terms substantially the same, or at least as favorable to the
Bank, as those prevailing at the time for comparable transactions with or
involving other nonaffiliated persons.
RESTRICTIONS ON DISTRIBUTION OF SUBSIDIARY BANK DIVIDENDS AND ASSETS. Dividends
paid by the Bank have provided substantially all of the Company's operating
funds, and for the foreseeable future it is anticipated that dividends paid by
the Bank to the Company will continue to be the Company's principal source of
operating funds. Capital adequacy requirements and state law serve to limit the
amount of dividends that may be paid by the Bank. Under federal law, the Bank
cannot pay a dividend if, after paying the dividend, the Bank will be
"undercapitalized." The FDIC may declare a dividend payment to be unsafe and
unsound even though the Bank would continue to meet its capital requirements
after the dividend. Under Kentucky banking law, the dividends the Bank can pay
during any calendar year are generally limited to its profits for that year,
plus its retained net profits for the two preceding years, less any required
transfers to surplus or to fund the retirement of preferred stock or debt,
absent approval of the Commissioner of the Kentucky Department of Financial
Institutions.
Because the Company is a legal entity separate and distinct from its
subsidiaries, its right to participate in the distribution of assets of any
subsidiary upon the subsidiary's liquidation or reorganization will be subject
to the prior claims of the subsidiary's creditors. In the event of a liquidation
or other resolution of an insured depository institution, the claims of
depositors and other general or subordinated creditors are entitled to a
priority of payment over the claims of holders of any obligation of the
institution to its shareholders, including any depository institution holding
company (such as the Company) or any shareholder or creditor thereof.
DEPOSIT INSURANCE ASSESSMENTS. Currently, the FDIC maintains two funds for the
insurance of deposits of financial institutions - the Bank Insurance Fund (BIF)
for deposits originated by banks and the Savings Association Insurance Fund
(SAIF) for deposits originated by savings associations, including savings
association deposits acquired by banks. The Bank must pay assessments to the
FDIC for federal deposit insurance protection. The FDIC has adopted a risk based
assessment system as required by amendments made to the Federal Deposit
Insurance Act. Under this system, FDIC-insured depository institutions pay
insurance premiums at rates based on their risk classification. Institutions
assigned to higher-risk classifications (that is, institutions that pose a
greater risk of loss to their respective deposit insurance funds) pay
assessments at higher rates than institutions that pose a lower risk. An
institution's risk classification is assigned based on its capital levels and
the level of supervisory concern the institution poses to the regulators. In
addition, the FDIC can impose special assessments in certain instances.
The Deposit Insurance Funds Act of 1996 provided for the recapitalization of the
SAIF through a one time special assessment in 1996 on SAIF-insured deposits.
After that special assessment, the assessment rate disparity between BIF and
SAIF members was eliminated. The current range of BIF and SAIF assessments is
between 0% and .27% of deposits.
The Deposit Insurance Funds Act of 1996 also addressed the payment of the
Financing Corporation's ("FICO") bond obligations, requiring both BIF and SAIF
insured institutions to share the cost of the FICO bond through additional
assessments on insured deposits.
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CROSS-GUARANTEE PROVISIONS. The Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA") contains a "cross-guarantee" provision which
generally makes commonly controlled insured depository institutions liable to
the FDIC for any losses incurred in connection with the failure of a commonly
controlled depository institution.
CONSUMER LAWS AND REGULATIONS. In addition to the laws and regulations discussed
herein, the Bank is also subject to certain consumer laws and regulations that
are designed to protect consumers in transactions with banks. While the list set
forth herein is not exhaustive, these laws and regulations include the Truth in
Lending Act, the Truth in Savings Act, the Electronic Funds Transfer Act, the
Expedited Funds Availability Act, the Equal Credit Opportunity Act, the Real
Estate Settlement Procedures Act, and the Fair Housing Act, among others. These
laws and regulations mandate certain disclosure requirements and regulate the
manner in which financial institutions must deal with clients when taking
deposits or making loans. The Bank must comply with the applicable provisions of
these consumer protection laws and regulations as part of its ongoing business
operations.
CAPITAL ADEQUACY REQUIREMENTS
RISK-BASED CAPITAL GUIDELINES. The Federal Reserve Board and FDIC have
substantially similar risk-based and leverage ratio guidelines for banking
organizations, which are intended to ensure that banking organizations have
adequate capital related to the risk levels of assets and off-balance sheet
instruments. Under the guidelines, specific categories of assets are assigned
different risk weights, based generally on the perceived credit risk of the
asset. These risk weights are multiplied by corresponding asset balances to
determine a "risk-weighted" asset base. The guidelines require a minimum total
risk-based capital ratio of 8.0% (of which at least 4.0% is required to consist
of Tier 1 capital elements). Total capital is the sum of Tier 1 and Tier 2
capital. As of December 31, 2000, the Company's ratio of Tier 1 capital to total
risk-weighted assets was 12.01% and its ratio of total capital to total
risk-weighted assets was 12.78%. As of December 31, 2000, the Bank's ratio of
Tier 1 capital to total risk-weighted assets was 11.59% and its ratio of total
capital to total risk-weighted assets was 12.36%. See Note 13 to the
Consolidated Financial Statements included in Republic's annual report to
shareholders for the year ended December 31, 2000.
In addition to the risk-based capital guidelines, the Federal Reserve Board uses
a leverage ratio as an additional tool to evaluate the capital adequacy of bank
holding companies. The leverage ratio is a company's Tier 1 capital divided by
its average total consolidated assets (less goodwill and certain other
intangible assets). Certain highly-rated bank holding companies may maintain a
minimum leverage ratio of 3.0%, but other bank holding companies may be required
to maintain a leverage ratio of up to 200 basis points above the regulatory
minimum. As of December 31, 2000, the Company's leverage ratio was 8.13%. The
FDIC's leverage guidelines require state banks to maintain Tier 1 capital of no
less than 5% of average total assets, except in the case of certain highly rated
banks for which the requirement is 3% of average total assets. As of December
31, 2000, the Bank's ratio of Tier 1 capital to average total assets (leverage
ratio) was 7.84%. See Note 13 to the Consolidated Financial Statements included
in Republic's annual report to shareholders for the year ended December 31,
2000.
The federal banking agencies' risk-based and leverage ratios are minimum
supervisory ratios generally applicable to banking organizations that meet
certain specified criteria, assuming that they have the highest regulatory
rating. Banking organizations not meeting these criteria are expected to operate
with capital positions well above the minimum ratios. The federal bank
regulatory agencies may set capital requirements for a particular banking
organization that are higher than the minimum ratios when circumstances warrant.
Federal Reserve Board guidelines also provide that banking organizations
experiencing internal growth or making acquisitions will be expected to maintain
strong capital positions substantially above the minimum supervisory levels,
without significant reliance on intangible assets. The FDIC may establish higher
minimum capital adequacy requirements if, for example, a bank has previously
received special attention or has a high susceptibility to interest rate risk.
CORRECTIVE MEASURES FOR CAPITAL DEFICIENCIES. The federal banking regulators are
required to take "prompt corrective action" with respect to capital-deficient
institutions. Agency regulations define, for each capital category, the levels
at which institutions are "well capitalized," "adequately capitalized,"
"undercapitalized,"
10
11
"significantly undercapitalized" and "critically undercapitalized." Under these
regulations, a "well capitalized" bank has a total risk-based capital ratio of
10% or higher; a Tier 1 risk-based capital ratio of 6% or higher; a leverage
ratio of 5% or higher; and is not subject to any written agreement, order or
directive requiring it to maintain a specific capital level for any capital
measure. An "adequately capitalized" bank has a total risk-based capital ratio
of 8% or higher; a Tier 1 risk-based capital ratio of 4% or higher; a leverage
ratio of 4% or higher (3% or higher if the bank was rated a CAMEL 1 in its most
recent examination report and is not experiencing significant growth); and does
not meet the criteria for a well capitalized bank. A bank is "undercapitalized"
if it fails to meet any one of the ratios required to be adequately capitalized.
Undercapitalized institutions are required to submit a capital restoration plan,
which must be guaranteed by any holding company of the institution. In addition,
agency regulations contain broad restrictions on certain activities of
undercapitalized institutions including asset growth, acquisitions, branch
establishment, and expansion into new lines of business. With certain
exceptions, an insured depository institution is prohibited from making capital
distributions, including dividends, and is prohibited from paying management
fees to control persons if the institution would be undercapitalized after any
such distribution or payment. A bank's capital classification will also affect
its ability to accept brokered deposits. Under the FDIC regulations, a bank may
not lawfully accept, roll over or renew brokered deposits unless either it is
well capitalized or it is adequately capitalized and receives a waiver from the
FDIC.
As an institution's capital decreases, the FDIC's enforcement powers become more
enhanced. A significantly undercapitalized institution is subject to mandated
capital raising activities, restrictions on interest rates paid and transactions
with affiliates, removal of management, and other restrictions. The FDIC has
only very limited discretion in dealing with a critically undercapitalized
institution and is virtually required to appoint a receiver or conservator.
Banks with risk-based capital and leverage ratios below the required minimums
may also be subject to certain administrative actions, including the termination
of deposit insurance upon notice and hearing, or a temporary suspension of
insurance without a hearing in the event the institution has no tangible
capital.
LEGISLATIVE INITIATIVES
The United States Congress continues to consider a number of proposals for
altering the structure, regulation, and competitive relationships of the
nation's financial institutions. Among such bills are proposals to combine banks
and thrifts into a unified charter, and to further expand or change the
regulation of the powers of depository institutions, bank holding companies, and
competitors of depository institutions. In addition, numerous regulations are
required to be promulgated to implement fully the significant legislative
changes made in the recently enacted Gramm-Leach-Bliley Act discussed above.
From time to time the Kentucky General Assembly also considers legislative
proposals that could significantly change state banking laws applicable to the
Bank, including proposals to expand the powers of state banks. It cannot be
predicted whether, or in what form, any of these proposals or regulatory
initiatives will be adopted, the impact they will have on the financial
institutions industry or the extent to which the business or financial condition
of the Company and its subsidiaries may be affected thereby.
11
12
STATISTICAL DISCLOSURES
The statistical information required by Item 1 may be found in the Company's
2000 Annual Report to Shareholders (Exhibit 13 hereto) which, to the extent
indicated, is hereby incorporated herein by reference, as follows:
Page in the Company's
2000 Annual Report to
GUIDE 3 DISCLOSURES Shareholders
- ------------------- ---------------------
I. Distribution of Assets, Liabilities
and Shareholders' Equity:
Interest Rates and Interest Differential
A. Average Balance Sheet 19
B. Net Interest Earnings Analysis 18
C. Rate/Volume Analysis 20
II. Investment Portfolio
A. Book Value of Investment Securities 26
B. Maturities of Investment Securities 26
C. Investment Securities Concentrations 26
III. Loan Portfolio
A. Types of Loans 23
B. Maturities and Sensitivity of Loans to
Changes in Interest Rates 23
C. Risk Elements
1. Nonaccrual, Past Due 90 Days or More,
and Restructured Loans 25
2. Potential Problem Loans 42
3. Foreign Outstandings N/A
4. Loan Concentrations 23
D. Other Interest-Bearing Assets N/A
IV. Summary of Loan Loss Experience
A. Analysis of Allowance for Loan Losses 24
B. Allocation of the Allowance for Loan Losses 24
V. Deposits
A. Average Balances 19
B. Maturities of Large Denomination Certificates
of Deposit 43
C. Foreign Deposit Liability Disclosure N/A
VI. Return on Equity and Assets
A. Return on Average Assets 16
B. Return on Average Equity 16
C. Dividend Payout Ratio 16
D. Equity to Assets Ratio 16
VII. Short-Term Borrowings 43
12
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ITEM 2. PROPERTIES
The Company's executive offices, principal support and operational functions are
located at 601 West Market Street in Louisville, Kentucky. Republic has a loan
production office in Southern Indiana while all of Republic's full-service
banking centers are located in Kentucky. The location of the 21 banking centers,
their respective approximate square footage and their form of occupancy is
described in the following table:
SQUARE OWNED (O)/
BANKING CENTERS FOOTAGE LEASED (L)
- --------------- ------- ----------
LOUISVILLE METROPOLITAN AREA
2801 Bardstown Road, Louisville (1) 5,000 L
601 West Market Street, Louisville (1) 43,000 L
661 South Hurstbourne Parkway, Louisville (1) 27,000 L
4921 Brownsboro Road, Louisville 2,000 L
4655 Outer Loop, Louisville 3,000 L
5320 Dixie Highway, Louisville 5,000 O/L (2)
3950 Kresge Way, Louisville 400 L
9600 Brownsboro Road, Louisville (1) 13,000 L
3726 Lexington Road, Louisville 4,000 L
7101 Bardstown Road, Louisville 5,000 O/L (2)
9101 U.S. Highway 42, Prospect 4,000 O/L (2)
LEXINGTON
651 Perimeter Drive, Lexington 4,000 L
2401 Harrodsburg Road, Lexington 4,000 O
641 East Euclid Avenue, Lexington 3,500 O
3098 Helmsdale Place, Lexington 4,000 O/L (2)
FRANKFORT
100 Highway 676, Frankfort 4,000 O/L (2)
1001 Versailles Road, Frankfort 4,000 O
BOWLING GREEN, 1700 Scottsville Road 4,000 O
OWENSBORO, 3500 Frederica Street 5,000 O
ELIZABETHTOWN, 1690 Ring Road 21,000 O
SHELBYVILLE, 1641 Midland Trail 5,000 O/L (2)
LOAN PRODUCTION OFFICE
- ----------------------
LOUISVILLE METROPOLITAN AREA
610 Eastern Boulevard, Clarksville (1) 3,200 L
REFUNDS NOW OFFICE
- ------------------
125-127-129 South Sixth Street, Louisville 4,700 L
(1) The Louisville metropolitan area locations comprised of 610 Eastern Blvd.
(Clarksville), 601 West Market Street, 2801 Bardstown Road, 9600 Brownsboro
Road and 661 South Hurstbourne Parkway are leased from Republic's Chairman,
Mr. Bernard M. Trager, and partnerships in which Republic's Chairman
(Bernard M. Trager) and Chief Executive Officer (Steven E. Trager) are
partners. See Item 13 of this Report.
13
14
(2) The banking centers at these locations are owned by Republic; however, they
are located on land that is leased through long-term agreements with third
parties.
ITEM 3. LEGAL PROCEEDINGS
On June 5, 1998, a suit against the Bank was filed in Jefferson County Circuit
Court, Louisville, Kentucky by Esther A. Grossman, individually and as next
friend of Jessica Grossman, a minor, and as administratrix of the estate of
Martin L. Grossman. The suit alleged that the Bank failed to notify Mr. Grossman
that his application for a $20,000 credit life insurance policy had been
declined by a life insurance company and that such alleged failure to notify Mr.
Grossman of the insurance declination caused his death. The plaintiff asserted
various causes of action, including breach of fiduciary duty, negligence, and
breach of contract, as well as statutory claims. The plaintiff was seeking
approximately $6.4 million in damages. This matter now stands terminated as the
parties entered into a Mutual Release and Settlement Agreement effectively dated
January 22, 2001. While the Agreement provides for a nominal payment to the
Plaintiff, the Agreement does not constitute an admission by Republic of any
violation of any law or of any of the legal rights of the Plaintiff.
On April 21, 2000, Beneficial Franchise Company Inc. filed a lawsuit in the
United States District Court for the Northern District of Illinois at Chicago
against Bank One, N.A., First Security Bank, River City Bank, Santa Barbara Bank
& Trust and the Company. The lawsuit alleges that the Defendants' tax refund and
anticipation services infringed on three patents owned by Beneficial and induced
others to infringe the patents. Beneficial seeks unspecified damages against all
defendants. The Company intends to vigorously defend the litigation. The
litigation is in the discovery phase and no trial date has been set.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the fourth
quarter of 2000.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDER
MATTERS
The information captioned "Market and Dividend Information" included on page 30
of the Company's annual report to shareholders for the year ended December 31,
2000 is incorporated herein by reference.
Republic has made available to its employees participating in its 401(k) plan
the opportunity to invest funds held in their accounts under the plan in shares
of Class A Common Stock of Republic. Shares were purchased by the independent
bank trustee, administering the plan, from time to time in the open market in
broker's transactions. As of December 31, 2000, approximately 145,486 shares of
Class A Common Stock were held by the trustee on behalf of the plan.
ITEM 6. SELECTED FINANCIAL DATA
The information captioned "Selected Consolidated Financial Data" included on
page 16 of the Company's annual report to shareholders for the year ended
December 31, 2000 is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Management's Discussion and Analysis of Financial Condition and Results of
Operations included on pages 17 through 30 of the Company's annual report to
shareholders for the year ended December 31, 2000, is incorporated herein by
reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
14
15
The information included under the caption "Asset/Liability Management and
Market Risk" included on pages 29 through 30 of the Company's annual report to
shareholders for the year ended December 31, 2000 is incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item, Report of Independent Public Accountants
and Consolidated Financial Statements and related notes, appears on pages 31
through 56 of the Company's annual report to shareholders for the year ended
December 31, 2000 and is incorporated herein by reference. The Selected
Quarterly Financial Data appears in Note 22 on page 56 of the Company's Annual
Report to Shareholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information required by this Item appears under the heading "PROPOSAL 1
ELECTION OF DIRECTORS" on pages 8 through 11 of the Proxy Statement, dated March
19, 2001, of Republic Bancorp, Inc. for the 2001 Annual Meeting of Shareholders
to be held April 18, 2001 ("Proxy Statement"), and under the heading "SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE" on page 21 of the Proxy
Statement, all of which is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
Information under the sub-heading "Director Compensation" on page 11 of the
Proxy Statement and under the heading "CERTAIN INFORMATION AS TO MANAGEMENT" on
pages 12 through 15 of the Proxy Statement is incorporated herein by reference.
In addition, the information under the heading "COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION" on pages 19 to 20 of the Proxy Statement
is incorporated herein by reference, provided that information in the Proxy
Statement under the heading "COMPENSATION COMMITTEE REPORT" is not incorporated
in this Report and shall not be deemed to be a part of this Report.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
SHARE OWNERSHIP
The following table reflects certain information regarding the beneficial
ownership of the outstanding shares of Republic Bancorp, Inc. as of March 1,
2001, based on information available to the board of directors. The Class B
Common Stock is convertible into Class A Common Stock on a share-for-share
basis. In the following table, information in the column headed "Class A Common"
does not reflect the shares of Class A Common Stock issuable upon conversion of
the Class B Common Stock. Information is included for:
(1) persons who own more than 5% of the Class A or the Class B Common
Stock outstanding on March 1, 2001,
(2) directors and nominees,
(3) the five (5) executive officers of Republic Bancorp, Inc. who received
the highest total salary and bonus during 2000 (the "named executive
officers"), and
(4) executive officers and directors of Republic Bancorp, Inc. as a group.
15
16
Unless indicated otherwise, Republic Bancorp Inc. believes that each person
named below has the sole power to vote and dispose of the voting securities
beneficially owned by such person. Please note that the table provides
information about the number of shares beneficially owned, as opposed to the
voting power of those shares Executive officers, directors and nominees as a
group (10 persons) hold 67% of the combined voting power of the Class A and
Class B Common Stock. Please also note that the table does not reflect the
results of Republic Bancorp's Dutch auction tender offer ,which expired on March
13, 2001. Based on a preliminary count by the depositary, approximately 747,325
shares of Class A Common Stock were tendered pursuant to the offer, of which
40,987 shares were tendered through notices of guaranteed delivery. As
determined under the Dutch auction tender procedures, the purchase price for
tendered shares is $10 per share.
Class A and Class B
Class A Common Class B Common Common Combined
----------------------- ----------------------- -------------------
Name Shares Percent Shares Percent Shares Percent
- ------------------------------- ----------------------- ----------------------- -------------------
FIVE PERCENT SHAREHOLDERS:
Bernard M. Trager 7,340,032 (1) 49.5% 1,545,858 (2) 73.5% 8,885,890 52.4%
601 West Market Street
Louisville, Kentucky 40202
Steven E. Trager 6,700,295 (3) 45.1 898,678 (4) 42.8 7,598,973 44.8
601 West Market Street
Louisville, Kentucky 40202
Scott Trager 6,686,115 (5) 45.0 917,300 (6) 43.6 7,603,415 44.9
601 West Market Street
Louisville, Kentucky 40202
Sheldon Gilman, Trustee 6,566,736 (7) 44.2 883,678 (8) 42.0 7,450,414 44.0
for the grandchildren of
Bernard M. Trager
400 West Market Street
Suite 2200
Louisville, Kentucky 40202
Teebank Family 5,903,612 (9) 39.8 763,984 (9) 36.3 6,667,596 39.4
Limited Partnership
7413 Cedar Bluff Court
Prospect, Kentucky 40059
Jaytee Properties 620,784 (9) 4.2 119,694 (9) 5.7 740,478 4.4
Limited Partnership
7413 Cedar Bluff Court
Prospect, Kentucky 40059
DIRECTORS, NOMINEES AND NAMED
EXECUTIVE OFFICERS:
Charles E. Anderson 53,490 (10) * 1,000 (11) * 54,490 *
Larry M. Hayes 315,878 (12) 2.1 4,694 * 320,572 1.9
Bill Petter 376,781 (13) 2.5 14,000 (14) 0.7 390,781 2.3
Sandra Metts Snowden 14,844 * - 14,844 *
R. Wayne Stratton 12,900 (15) * 1,700 (16) * 14,600 *
Samuel G. Swope 38,251 (17) * 5,694 * 43,945 *
Bernard M. Trager 7,340,032 (1) 49.5 1,545,858 (2) 73.5 8,885,890 52.4
Scott Trager 6,686,115 (5) 45.0 917,300 (6) 43.6 7,603,415 44.9
Steven E. Trager 6,700,295 (3) 45.1 898,678 (4) 42.8 7,598,973 44.8
Kevin Sipes 1,825 (18) * 200 * 2,025 *
EXECUTIVE OFFICERS, DIRECTORS AND
NOMINEES AS A GROUP (10 PERSONS) 7,876,380 53.1% 1,621,968 77.2% 9,498,148 56.1%
16
17
* Less than .5%
(1) Includes 5,903,612 shares held of record by Teebank Family Limited
Partnership ("Teebank") and 620,784 shares held of record by Jaytee
Properties Limited Partnership ("Jaytee"). Bernard Trager is a general and
limited partner and Jean S. Trager, his wife, is a limited partner of both
Teebank and Jaytee. Bernard Trager shares investment power over the shares
held of record by Teebank and Jaytee with Steven Trager. Includes 257,458
unallocated shares held of record by Republic Bancorp's Employee Stock
Ownership Plan ("ESOP"), of which Bernard Trager is a member of the
Administrative Committee. Bernard Trager shares voting power over the
shares held of record by the ESOP with Bill Petter and Larry Hayes.
Includes 559 shares allocated to Bernard Trager under the ESOP. Also
includes 100,323 shares held of record by Trager Family Foundation, a
charitable foundation organized under Section 501(c)(3) of the Internal
Revenue Code. Bernard Trager shares voting and investment power over these
shares with Mrs. Trager, Steven Trager, and Shelley Trager Kusman.
(2) Includes 763,984 shares held of record by Teebank and 119,694 shares held
of record by Jaytee. Bernard Trager is a general and limited partner and
Jean Trager, his wife, is a limited partner of both Teebank and Jaytee.
Bernard Trager shares investment power over the shares held of record by
Teebank and Jaytee with Steven Trager. Also includes 117,454 shares owned
by Jean Trager, with whom Bernard Trager shares voting and investment
power.
(3) Includes 5,903,612 shares held of record by Teebank and 620,784 shares held
of record by Jaytee. Steven Trager is a general and limited partner of both
Teebank and Jaytee. Trusts for the benefit of, among others, Steven Trager,
his wife and his two minor children are limited partners of both Teebank
and Jaytee. Steven Trager shares investment power over the shares held of
record by Teebank and Jaytee with Bernard Trager, and he shares voting
power over the shares held of record by Teebank and Jaytee with Scott
Trager and Sheldon Gilman, as trustee. Includes 5,000 shares held by Steven
Trager's wife. Includes 100,323 shares held of record by Trager Family
Foundation, a charitable foundation organized pursuant to Section 501(c)(3)
of the Internal Revenue Code. Steven Trager shares voting and investment
power over these shares with Jean Trager, Bernard Trager, and Shelley
Trager Kusman. Also includes 576 shares allocated to Steven Trager under
the ESOP and 5,000 shares held in a 401(k) plan.
(4) Includes 763,984 shares held of record by Teebank and 119,694 shares held
of record by Jaytee. Steven Trager is a general and limited partner of both
Teebank and Jaytee. Trusts for the benefit of, among others, Steven Trager,
his wife and his two minor children are limited partners of both Teebank
and Jaytee. Steven Trager shares investment power over the shares held of
record by Teebank and Jaytee with Bernard Trager, and he shares voting
power over the shares held of record by Teebank and Jaytee with Scott
Trager and Sheldon Gilman, as trustee. Also includes 1,000 shares held in a
401(k) plan.
(5) Includes 5,903,612 shares held of record by Teebank and 620,784 shares held
of record by Jaytee. Scott Trager is a limited partner of both Teebank and
Jaytee. Scott Trager shares voting power over the shares held of record by
Teebank and Jaytee with Steven Trager and Sheldon Gilman, as trustee.
Includes 19,906 shares held of record by a family trust of which Scott
Trager is a co-trustee and a beneficiary. Includes 25,000 shares of Class A
Common Stock under currently exercisable options. Also includes 576 shares
allocated to Scott Trager under the ESOP and 12,599 shares held in a 401(k)
plan.
(6) Includes 763,984 shares held of record by Teebank and 119,694 shares held
of record by Jaytee. Scott Trager is a limited partner of both Teebank and
Jaytee. Scott Trager shares voting power over the shares held of record by
Teebank and Jaytee with Steven Trager and Sheldon Gilman, as trustee.
Includes 3,380 shares held of record by a family trust of which Scott
Trager is a co-trustee and a beneficiary. Includes 5,000 shares of Class B
Common Stock under currently exercisable options. Also includes 980 shares
held in a 401(k) plan.
(7) Includes 5,903,612 shares held of record by Teebank and 620,784 shares held
of record by Jaytee. Sheldon Gilman is a limited partner of both Teebank
and Jaytee, as trustee for the grandchildren of Bernard Trager. Sheldon
Gilman shares voting power over the shares held of record by Teebank and
Jaytee with Steven Trager and Scott Trager. Also includes 32,000 shares
owned by Mr. Gilman's wife.
17
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(8) Includes 763,984 shares held of record by Teebank and 119,694 shares held
of record by Jaytee. Sheldon Gilman is a limited partner of both Teebank
and Jaytee, as trustee for the grandchildren of Bernard Trager. Sheldon
Gilman shares voting power over the shares held of record by Teebank and
Jaytee with Steven Trager and Scott Trager.
(9) Teebank and Jaytee are limited partnerships of which Bernard Trager and
Steven Trager are general and limited partners. The shares of Common Stock
beneficially owned by Teebank and Jaytee are also shown in the above table
as being beneficially owned by Bernard Trager, Steven Trager, Scott Trager
and Sheldon Gilman, trustee, who share voting and/or investment power over
the shares held by the partnership. The following table provides
information about the units of Teebank and Jaytee owned by directors and
officers of Republic Bancorp. The number of units owned by the partners of
Jaytee and Teebank are identical in each partnership.
Name Number of Units Percent of Outstanding
---- --------------- ----------------------
Bernard M. Trager 1,087,199 (a) 54.4%
Steven E. Trager 498,975 (b) 24.9
Scott Trager 4,036 0.2
a) Includes 563,599 units held by Bernard Trager's wife, Jean Trager.
b) Includes 271,080 units held in a revocable trust and 144,624
units held for the benefit of Steven Trager's minor children;
also includes 83,271 shares held in an irrevocable trust for
the benefit of, among others, Steven Trager, his wife and his
minor children.
(10) Includes 6,500 shares held jointly with his wife, over which Charles
Anderson shares investment and voting power, and 11,250 shares that can be
acquired upon conversion of Trust Preferred securities.
(11) Shares held jointly with his wife, over which Charles Anderson shares
investment and voting power.
18
19
(12) Includes 2,350 shares held by his wife, 3,000 shares that can be acquired
by Larry Hayes and 7,000 shares that can be acquired by his wife upon
conversion of Trust Preferred securities, 1,000 shares held by Midwest
Construction, a Kentucky corporation of which Mr. Hayes is a majority
owner; and 16,000 shares held in BPH Partnership, a Kentucky limited
liability partnership in which Larry Hayes is a limited partner. Larry
Hayes shares investment and voting power over the shares held by his wife
and BPH Partnership. Also Includes 257,458 unallocated shares held of
record by Republic Bancorp's Employee Stock Ownership Plan, of which Larry
Hayes is a member of the Administrative and Investment Committees. As a
member of the Administrative Committee, Larry Hayes shares voting power
over these shares with Bernard Trager and Bill Petter, and, as a member of
the Investment Committee, shares investment power over these shares with
Michael Ricketts and Bill Petter.
(13) Includes 257,458 unallocated shares held of record by Republic Bancorp's
Employee Stock Ownership Plan, of which Bill Petter is a member of the
Administrative and Investment Committees. As a member of the Administrative
Committee, Bill Petter shares voting power over these shares with Bernard
Trager and Larry Hayes, and, as a member of the Investment Committee,
shares investment power over these shares with Michael Ricketts and Larry
Hayes. Includes 25,000 shares of Class A Common Stock that can be acquired
under currently exercisable options. Also includes 576 shares allocated to
Bill Petter under the ESOP and 10,000 shares held in a 401(k) plan.
(14) Includes 5,000 shares of Class B Common Stock that can be acquired under
currently exercisable options. Also includes 2,000 shares held in a 401(k)
plan.
(15) Includes 3,500 shares held jointly with his wife and 9,400 shares held by
his wife. Wayne Stratton shares investment and voting power over these
shares.
(16) Includes 700 shares held jointly with his wife and 1,000 shares held by his
wife. Wayne Stratton shares investment and voting power over these shares.
(17) Includes 5,000 shares that can be acquired upon conversion of Trust
Preferred securities, which are held of record by Swope Enterprises Inc.,
L.P., a Kentucky limited liability partnership in which Samuel Swope is a
limited partner.
(18) Includes 325 shares allocated to Kevin Sipes under the Employee Stock
Ownership Plan (ESOP).
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required by this item is contained on pages 19 to 21 under the
headings "COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION" and
"CERTAIN OTHER RELATIONSHIPS AND RELATED TRANSACTIONS" of the Proxy Statement,
all of which is incorporated herein by reference.
19
20
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(1) FINANCIAL STATEMENTS.
The following consolidated financial statements of the registrant and report of
independent public accountants are included in the Annual Report to Shareholders
for the fiscal year ended December 31, 1999, on the pages indicated and are
incorporated herein by reference.
Description Page
- --------------------------------------------------------------------------------
Report of Independent Auditors 31
Consolidated balance sheets - December 31, 2000 and 1999 32
Consolidated statements of income and comprehensive income -
years ended December 31 2000, 1999, and 1998 33
Consolidated statements of changes in stockholders' equity -
years ended December 31, 2000, 1999 and 1998 34-35
Consolidated statements of cash flows -
years ended December 31, 2000, 1999 and 1998 36
Notes to consolidated financial statements 37-56
(a)(2) FINANCIAL STATEMENTS SCHEDULES:
Schedules are omitted because the information is not applicable.
(a)(3) EXHIBITS:
The Exhibit Index on page 22 of this report is incorporated herein by reference.
The management contracts and compensatory plans or arrangements required to be
filed as exhibits to this Form 10-K pursuant to Item 14(c) are noted by asterisk
in the Exhibit Index.
(b) REPORTS ON FORM 8-K.
No reports on Form 8-K were filed during the fourth quarter of 2000.
20
21
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
REPUBLIC BANCORP, INC.
March 16, 2001 By: /s/ Steven E. Trager
--------------------
Steven E. Trager
President & Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated.
/s/ Bernard M. Trager Chairman of the Board & Director March 16, 2001
- --------------------- --------------
Bernard M. Trager
/s/ Steven E. Trager President, Chief Executive March 16, 2001
- -------------------- Officer & Director --------------
Steven E. Trager
/s/ Scott Trager Vice Chairman & Director March 16, 2001
- ---------------- --------------
Scott Trager
/s/ Bill Petter Vice Chairman, Chief Operating March 16, 2001
- --------------- Officer & Director --------------
Bill Petter
/s/ Kevin Sipes Chief Financial Officer and March 16, 2001
- --------------- Chief Accounting Officer --------------
Kevin Sipes
/s/ R. Wayne Stratton Director March 16, 2001
- --------------------- --------------
R. Wayne Stratton
/s/ Larry M. Hayes Director March 16, 2001
- ------------------ --------------
Larry M. Hayes
/s/ Samuel G. Swope Director March 16, 2001
- ------------------- --------------
Samuel G. Swope
/s/ Sandra Metts Snowden Director March 16, 2001
- ------------------------ --------------
Sandra Metts Snowden
/s/ Charles E. Anderson Director March 16, 2001
- ----------------------- --------------
Charles E. Anderson
21
22
INDEX TO EXHIBITS
No. Description
2.1 Agreement to Purchase Assets and Assume Liabilities dated April 1, 1997
by and between United Commonwealth Bank, FSB and Republic Bank & Trust
Company (Incorporated by reference to Exhibit 2.1 to the Current Report
on Form 8-K of Registrant as of November 7, 1997 (Commission File Number:
33-77324))
2.2 Purchase and Assumption Agreement dated July 18, 1997 between The Paducah
Bank & Trust Company and Republic Bank & Trust Company (Incorporated by
reference to Exhibit 2.2 to the Current Report on Form 8-K of Registrant
as of November 7, 1997 (Commission File Number: 33-77324)) 2.3 Purchase
and Assumption Agreement dated July 21, 1997 between Peoples First
National Bank & Trust Company and Republic Bank & Trust Company
(Incorporated by reference to Exhibit 2.3 to the Current Report on Form
8-K of Registrant as of November 7, 1997 (Commission File Number:
33-77324))
2.4 Purchase and Assumption Agreement dated September 12, 1997 between First
Federal Savings Bank of Leitchfield and Republic Bank & Trust Company
(Incorporated by reference to Exhibit 2.4 to the Current Report on Form
8-K of Registrant as of November 7, 1997 (Commission File Number:
33-77324))
3(i) Articles of Incorporation of Registrant, as amended (Incorporated by
reference to Exhibit 3(i) to the Registration Statement on Form S-1 of
Registrant (Registration No. 333-56583)) 3(ii) Bylaws of Registrant, as
amended (Incorporated by reference to Exhibit 3(ii) to the Registration
Statement on Form S-1 of Registrant (Registration No. 333-56583))
4.1 Provisions of Articles of Incorporation of Registrant defining rights of
security holders (see Articles of Incorporation, as amended, of
Registrant incorporated as Exhibit 3(i) herein)
4.2 Agreement Pursuant to Item 601 (b)(iii) of Regulation S-K (Incorporated
by reference to Exhibit 4.2 of the Annual Report on Form 10-K of
Registrant for the year ended December 31, 1997 (Commission File Number:
33-77324))
10.1* Officer Compensation Continuation Agreement with Steven E. Trager, dated
January 12, 1995 (Incorporated by reference to Exhibit 10.1 to
Registrant's Annual Report on Form 10-K for the year ended December 31,
1995 (Commission File Number: 33-77324))
10.2* Stock Option Plan Agreement with Steven E. Trager, dated January 12, 1996
(Incorporated by reference to Exhibit 10.2 to Registrant's Annual Report
on Form 10-K for the year ended December 31, 1995 (Commission File
Number: 33-77324))
10.5* Officer Compensation Continuation Agreement with A. Scott Trager, dated
January 12, 1995 (Incorporated by reference to Exhibit 10.5 to
Registrant's Annual Report on Form 10-K for the year ended December 31,
1995 (Commission File Number: 33-77324))
10.6* Stock Option Plan Agreement with A. Scott Trager dated January 12, 1996
(Incorporated by reference to Exhibit 10.6 to Registrant's Annual Report
on Form 10-K for the year ended December 31, 1995 (Commission File
Number: 33-77324))
10.7* Officer Compensation Continuation Agreement with E. William Petter, Jr.,
dated January 12, 1995 (Incorporated by reference to Exhibit 10.7 to
Registrant's
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Annual Report on Form 10-K for the year ended December 31, 1995
(Commission File Number: 33-77324))
10.8* Stock Option Plan Agreement with E. William Petter, Jr., dated January
12, 1996 (Incorporated by reference to Exhibit 10.8 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1995
(Commission File Number: 33-77324))
10.9* Death Benefit Agreement with Bernard M. Trager dated September 10, 1996
(Incorporated by reference to Exhibit 10.9 to Registrant's Annual Report
on Form 10-K for the year ended December 31, 1996 (Commission File
Number: 33-77324))
10.10 Lease between Republic Bank & Trust Company and TEECO Properties dated
October 1, 1996, relating to 601 West Market Street, Louisville
(Incorporated by reference to Exhibit 10.10 to the Registration Statement
on Form S-1 of Registrant (Registration No. 333-56583))
10.11 Lease between Republic Bank & Trust Company and Jaytee Properties, dated
August 1, 1982, relating to 2801 Bardstown Road, Louisville (Incorporated
by reference to Exhibit 10.11 of Registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 1998 (Commission File Number:
33-77324))
10.12 Lease between Republic Bank & Trust Company and Jaytee Properties, dated
February 3, 1993, as amended, relating to 661 South Hurstbourne Parkway,
Louisville (Incorporated by reference to Exhibit 10.12 of Registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1998
(Commission File Number: 33-77324))
10.13 Lease between Republic Bank & Trust Company and Jaytee Properties, dated
November 17, 1997, relating to 9600 Brownsboro Road, Louisville
(Incorporated by reference to Exhibit 10.13 of Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1998 (Commission File
Number: 33-77324))
10.16* Summary of Directors Stock Options (Incorporated by reference to Exhibit
10.16 of Registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998 (Commission File Number: 000-24649))
10.17 Lease between Republic Bank & Trust Company and Jaytee Properties, dated
February 1, 1999, as amended, relating to 661 South Hurstbourne Parkway
(Incorporated by reference to Exhibit 10.17 of Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1999 (Commission File
Number: 33-77324))
10.18 Lease between Republic Bank & Trust Company and Jaytee Properties, dated
August 1, 2000, as amended, relating to 9600 Brownsboro Road
(Incorporated by reference to Exhibit 10.18 of Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1999 (Commission File
Number: 33-77324))
10.19 Lease between Republic Bank & Trust Company and Jaytee Properties, dated
May 1, 1999, as amended, relating to 610 Eastern Boulevard, Clarksville,
Indiana (Incorporated by reference to Exhibit 10.19 of Registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1999
(Commission File Number: 33-77324))
10.20 Lease between Republic Bank & Trust Company and Jaytee Properties, dated
February 1, 2000, as amended, relating to 661 South Hurstbourne Parkway
10.21 Lease between Republic Bank & Trust Company and Jaytee Properties, dated
February 1, 2000, as amended, relating to 661 South Hurstbourne Parkway
10.22 Lease between Republic Bank & Trust Company and Jaytee Properties, dated
February 1, 2000, as amended, relating to 9600 Brownsboro Road
11 Statement regarding Computation of Per Share Earnings
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13 Excerpts from the 2000 Annual Report to Shareholders incorporated by
reference
21 Subsidiaries of the Registrant
23 Consent of Crowe, Chizek & Company LLP
* Denotes management contracts and compensatory plans or arrangements required
to be filed as exhibits to this Form 10-K pursuant to Item 14(c).
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