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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934 [No Fee Required]
For the Fiscal Year Ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [No Fee Required]
For the Transition Period From __________ to ___________
Commission File Number: 0-15734
REPUBLIC BANCORP INC.
(Exact name of registrant as specified in its charter)
Michigan 38-2604669
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1070 East Main Street, Owosso, Michigan 48867
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (517) 725-7337
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $5.00 Par Value
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (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 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 registrant's common stock held by
non-affiliates, based on the closing price on March 7, 1997 of $13.50, was
$204.5 million.
Number of shares of registrant's common stock outstanding
as of March 7, 1997: 17,124,642
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of registrant's Proxy Statement dated March 19, 1997 ("1997
Proxy Statement") filed with the Commission (Part III).
(2) Registrant's 1996 Annual Report Supplement to the 1997 Proxy Statement
(Part II and Part IV).
(3) Portions of registrant's 1996 Annual Report to Shareholders (Part II and
Part IV).
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FORM 10-K TABLE OF CONTENTS
Page
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Part I
Item 1 - Business............................................... 1 - 9
Item 2 - Properties............................................. 10
Item 3 - Legal Proceedings...................................... 10
Item 4 - Submission of Matters to a Vote of Security Holders.... 10
Part II
Item 5 - Market for Registrant's Common Stock and
Related Stockholder Matters............................ 10
Item 6 - Selected Financial Data................................ 10
Item 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations.................... 10
Item 8 - Financial Statements and Supplementary Data............ 11
Item 9 - Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.................... 11
Part III
Item 10 - Directors and Executive Officers of the Registrant..... 11
Item 11 - Executive Compensation................................. 11
Item 12 - Security Ownership of Certain Beneficial Owners and
Management............................................. 12
Item 13 - Certain Relationships and Related Transactions......... 12
Part IV
Item 14 - Exhibits, Financial Statement Schedules and Report on
Form 8-K...............................................12 - 13
Signatures........................................................ 14
PART I
ITEM 1. BUSINESS
General
Republic Bancorp Inc. (the "Company") is a bank holding company incorporated
under the laws of the State of Michigan in 1986. The Company's principal
office is located in Ann Arbor, Michigan. The Company currently operates 106
banking and mortgage banking offices in 19 states. Commercial and retail
banking products are offered through its two banking subsidiaries: Republic
Bank and Republic Savings Bank. The subsidiary banks operate 42 retail
banking and loan production offices in primarily Michigan and Ohio.
To complement its commercial and retail banking activities, the Company
has grown a nationwide mortgage banking business with Market Street Mortgage
Corporation ("Market Street"), an 80% majority-owned mortgage banking
subsidiary headquartered in Clearwater, Florida, with 35 offices in 10
states; Republic Bancorp Mortgage Inc. ("Republic Bancorp Mortgage"), a
mortgage company located in Farmington Hills, Michigan, with 13 offices in 5
states; and CUB Funding Corporation ("CUB Funding"), a mortgage company based
in Calabasas, California, with 16 offices in 4 states. Republic Bancorp
Mortgage is a wholly owned subsidiary of Republic Bank and CUB Funding is an
80% majority-owned subsidiary of Republic Bank.
At December 31, 1996, the Company had consolidated total assets of $1.5
billion, total deposits of $1.0 billion and shareholders' equity of $121.8
million. For the year ended December 31, 1996, the Company reported net
income of $14.7 million, compared to $14.3 million for 1995. Mortgage loan
originations totaled $3.6 billion in 1996, compared to $2.8 billion in 1995.
At year-end 1996, the Company's mortgage loan servicing portfolio was $2.7
billion, compared to $4.0 billion at year-end 1995.
Business Segments
Commercial and Retail Banking
The Company has two banking subsidiaries: Republic Bank and Republic
Savings Bank. Republic Bank, a state-chartered bank headquartered in Ann
Arbor, Michigan, exercises the powers of a full-service commercial bank,
excluding trust powers, and operates 26 offices in six market areas in
Michigan. At December 31, 1996, Republic Bank had $976 million in assets and
$735 million in deposits. Republic Savings Bank, a state-chartered savings
bank headquartered in Pepper Pike, Ohio, exercises the powers of a
full-service savings bank and operates 16 offices primarily in the greater
Cleveland area as well as Columbus, Dayton and Cincinnati, Ohio and
Indianapolis, Indiana. At December 31, 1996, Republic Savings Bank had $467
million in assets and $285 million in deposits.
The commercial and retail banking segment consists of commercial and
Small Business Administration (SBA) lending, mortgage portfolio lending, home
equity lending and the deposit-gathering function. Lending activity at the
banking subsidiaries is primarily focused on real estate-secured lending to
minimize credit risk. While fixed rate and variable rate residential mortgage
loans secured by the underlying 1-4 family residential property represent the
main types of loans originated, efforts are also concentrated on generating
commercial real estate loans. In addition, emphasis is placed on loans that
are government guaranteed, such as SBA loans. Commercial and industrial loans
made are generally secured by company assets at a 75% or less loan-to-value
ratio and by personal guarantees.
The banking subsidiaries target the customer market segment that is
interested in receiving personalized banking service when opening a deposit
account. Deposits consist primarily of retail deposits gathered from within
the local markets served. At December 31, 1996, interest-bearing deposits
constituted 87% of consolidated total deposits, and retail time deposits of
$100,000 or more comprised 18% of interest-bearing deposits.
Mortgage Banking
Mortgage banking activities are concentrated in two areas: mortgage loan
production and mortgage loan servicing. Mortgage loan production involves the
origination, purchase and sale of single-family residential mortgage loans.
As a mortgage loan servicer, the Company administers loans, collects and
remits loan payments, holds funds in escrow for payment of taxes and
insurance, counsels delinquent mortgagors and supervises foreclosures and
property dispositions in the event of unremedied defaults. Mortgage lending
is conducted by all of the Company's subsidiaries and affiliates, while
mortgage loan servicing is conducted by the Company's three mortgage
companies. All mortgage loan originations or purchases are funded by the
Company's banking subsidiaries.
1
Residential mortgage loans are originated through 100 retail mortgage
loan production offices located in Michigan, Alabama, Arizona, California,
Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Maryland,
Massachusetts, New York, North Carolina, Ohio, Utah and Virginia, as well as
through wholesale operations conducted from 6 offices (one each in Arizona
and Oregon and four in California). Wholesale originations involve the
purchase of residential loans from approximately 600 participating brokers
and correspondents.
Each retail loan production office is responsible for processing loan
applications received and preparing loan documentation. Loan applications are
then evaluated by the underwriting departments of either the Company's
banking subsidiaries or mortgage banking subsidiary for compliance with the
Company's underwriting criteria, including loan to value ratios, borrower
qualifications and required insurance. Residential loans purchased through
the wholesale operation are processed and prepared by the brokers. These
loans are subsequently reviewed by the Company's quality control personnel
using certain verification procedures.
The Company originates primarily conventional mortgage loans secured by
residential properties which conform to the underwriting guidelines for sale
to the Federal National Mortgage Association (FNMA) and the Federal Home Loan
Mortgage Corporation (FHLMC). Loans guaranteed by the Department of Veterans
Affairs (VA) and insured through the Federal Housing Administration (FHA) are
originated in compliance with their underwriting guidelines permitting
conversion of such loans into mortgage-backed securities issued by the
Government National Mortgage Association (GNMA).
Growth in the Company's residential mortgage origination business during
1996 was funded primarily with the subsidiary banks' retail deposits and
short-term borrowings, including Federal Home Loan Bank (FHLB) advances and
securities sold under agreement to repurchase. The majority of all mortgage
loans originated are held for a short period of time (generally less than 60
days) with the intent of selling them into the secondary market. These loans
are classified as mortgage loans held for sale in the Company's consolidated
balance sheet. Mortgage loans held for sale consist of loans that will be
sold directly to secondary market investors and loans that are being prepared
for securitization into mortgage-backed securities, however, the
mortgage-backed security has not yet been formed and issued. These mortgage
loans and resulting mortgage-backed securities are typically sold without
recourse to the Company in the event of default by the borrowers. To minimize
interest rate risk, the Company obtains mandatory purchase commitments from
investors prior to funding the loans.
Consistent with the Company's strategy of managing interest rate risk,
substantially all long-term fixed rate mortgages originated are typically
securitized and sold or sold directly to secondary market investors. The
majority of short-term fixed rate mortgages and variable rate mortgages are
typically securitized and sold or sold directly to secondary market
investors, although a portion of the mortgage originations my be retained in
the loan portfolios of Republic Bank and Republic Savings Bank. Portfolio
loans may be securitized and reclassified as available for sale.
When the Company sells residential mortgage loans originated or
purchased, it may either retain or sell the rights to service those loans and
receive the related fees. While there is an active market for selling
servicing rights (which are generally valued in relation to the present value
of the anticipated cash flow generated by the servicing rights), the
aggregation of a servicing portfolio can also create a substantial continuing
source of income. Market Street, Republic Bancorp Mortgage and CUB Funding
receive servicing fees ranging generally from 25 to 45 basis points per annum
on their respective servicing portfolios.
The Company's current operating strategy for the mortgage banking segment
is to continue growing mortgage banking fee income and related interest
income while managing interest rate and liquidity risks. The Company's
mortgage banking segment earn fees for originating and servicing loans.
Selling mortgage loan originations into the secondary market provides
additional revenue, the level of which is dependent upon market conditions at
the time of sale. In addition, the mortgage banking segment effectively earns
long-term interest rates on short-term investments (i.e., mortgage loans held
for sale), which helps the Company to minimize interest rate risk.
Principal Sources of Revenue
The principal sources of revenue for the Company are interest income from
interest and fees on loans and mortgage banking income. Interest and fees on
loans totaled $80 million in 1996, an increase of 13% from $71 million in
1995 and up 50% from $54 million in 1994. In 1996 and 1995, interest and fees
on loans accounted for 42% of total revenues, compared to 35% in 1994.
Mortgage banking income, the largest component of noninterest income, totaled
$86 million in 1996, an increase of 22% from $71 million in 1995 and up 24%
from $70 million in 1994. Mortgage banking income represented 45% of total
revenues in 1996, compared to 42% in 1995 and 45% in 1994.
2
Competition
Mortgage banking and commercial and retail banking are highly competitive
businesses in which the Company faces numerous banking and non-banking
institutions as competitors. By reason of changes in Federal law (which
became effective on September 29, 1995) and Michigan law (which became
effective on November 29, 1995) the number and types of potential depository
institution competitors have substantially increased. See "Recently Enacted
and Proposed Legislation."
In addition to competition from other banks, the Company continues to
face increased competition from other financial services organizations.
Competition from finance companies and credit unions has increased in the
areas of consumer lending and deposit gathering. The Company's mortgage
banking subsidiary and affiliates also face significant competition from
numerous bank and non-bank companies. Generally, other financial institutions
have greater resources to use in making acquisitions and higher lending
limits than those of the Company's banking subsidiaries or any banking
institution that the Company could acquire. Such institutions can also
provide certain non-traditional financial products and services to their
customers which the Company's banking subsidiaries may not offer (e.g.,
brokerage services and insurance products).
The principal factors of competition in the markets for deposits and
loans are price (interest rates paid and charged) and customer service. The
Company's banking subsidiaries compete for deposits by offering depositors a
variety of checking and savings accounts, time deposits, convenient office
locations and other services. The Company competes for loans through the
efficiency and quality of the services it provides to borrowers, real estate
brokers and home builders. The Company seeks to compete for loans primarily
on the basis of customer service, including prompt underwriting decisions and
funding of loans, and by offering a variety of loan programs as well as
competitive interest rates.
Supervision and Regulation
Bank holding companies, banks and savings banks are subject to extensive
regulation under both federal and state law. To the extent the following
material describes statutory and regulatory provisions, it is qualified in
its entirety by reference to the particular statutory and regulatory
provisions. A change in applicable law or regulation could have a material
effect on the business of the Company.
1. Bank Holding Company
The Company, as a bank holding company, is regulated under the Bank
Holding Company Act of 1956, as amended ("BHC Act"), and is subject to
the supervision of the Board of Governors of the Federal Reserve System
("Federal Reserve Board"). The Company is registered as a bank holding
company with the Federal Reserve Board and is required to file with the
Federal Reserve Board an annual report and such additional information as
the Federal Reserve Board may require pursuant to the BHC Act. The
Federal Reserve Board may also make inspections and examinations of the
Company and its subsidiaries.
Under the BHC Act, bank holding companies such as the Company are
prohibited, with certain limited exceptions, from engaging in activities
other than those of banking or of managing or controlling banks and from
acquiring or retaining direct or indirect ownership or control of voting
shares or assets of any company which is not a bank or bank holding
company, other than subsidiary companies furnishing services to or
performing services for its subsidiaries, and other subsidiaries engaged
in activities which the Federal Reserve Board determines to be so closely
related to banking or managing or controlling banks as to be a proper
incident thereto. Since September 29, 1995, the BHC Act has permitted the
Federal Reserve Board under specified circumstances to approve the
acquisition, by a bank holding company (such as the Company) located in
one State, of a bank or bank holding company located in another State
without regard to any prohibition contained in State law. See "Recently
Enacted and Proposed Legislation."
The Company is a corporation which is separate and distinct from its
depository institutions and other subsidiaries. Most of the Company's
revenues are received by it in the form of dividends or interest paid by
its subsidiaries. There are statutory and regulatory limitations on the
timing and amount of dividends which may be paid to the Company by it
subsidiaries.
3
Under Federal Reserve Board policy, the Company is expected to act as
a source of financial and managerial strength to Republic Bank and
Republic Savings and to commit resources to support them. This support
may be required at times when, in the absence of such Federal Reserve
Board policy, the Company would not otherwise be required to provide it.
In addition, in certain circumstances a Michigan chartered bank having
impaired capital may be required by the Commissioner of the Michigan
Financial Institutions Bureau ("FIB") either to restore the bank's
capital by a special assessment upon its shareholders, or to initiate the
liquidation of the bank.
Any capital loans by a bank holding company to a subsidiary bank are
subordinate in right of payment to deposits and to certain other
indebtedness of such subsidiary bank. In the event of a bank holding
company's bankruptcy, any commitment by the bank holding company to a
federal bank regulatory agency to maintain the capital of a subsidiary
bank will be assumed by the bankruptcy trustee and entitled to a priority
of payment. This priority would apply to guarantees of capital plans
under the Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA").
The Federal Reserve Board has adopted capital adequacy guidelines to
provide a framework for supervisory evaluation of the capital adequacy of
bank holding companies. The capital adequacy guidelines establish minimum
levels of capital, measured in several different manners (including as a
function of risk-adjusted assets) described in detailed regulations,
which must be maintained by a bank holding company.
FDICIA requires the federal bank regulatory agencies biennially to
review risk-based capital standards to ensure that they adequately
address interest rate risk, concentration of credit risk and risks from
non-traditional activities and, since adoption of the Riegle Community
Development and Regulatory Improvement Act of 1994 (the "Riegle Act"), to
do so taking into account the size and activities of depository
institutions and the avoidance of undue reporting burdens. See "Recently
Enacted and Proposed Legislation." In 1995, the agencies adopted
regulations requiring as part of the assessment of an institution's
capital adequacy the consideration of (i); identified concentrations of
credit risks, (ii) the exposure of the institution to a decline in the
value of its capital due to changes in interest rates, and (iii) the
application of revised conversion factors and netting rules on the
institution's potential future exposure from derivative transactions. In
September 1996, the agencies adopted regulations requiring each bank
holding company having trading activity equal to (a) 10% or more of its
consolidated total assets or (b) $1 billion, to measure, and to hold
amounts of capital commensurate with, the market risk of its trading
activities. Market risk refers to the risk of loss resulting from
movements in market prices, which can occur both from broad market
movements such as the general level of interest rates, and from changes
in the market value of specific positions, such as the credit risk of the
issuer of a specific instrument. The new regulations took effect for
voluntary compliance on January 1, 1997, with mandatory compliance
commencing January 1, 1998.
2. Banking Subsidiaries
The Company's commercial bank subsidiary, Republic Bank, is subject to
regulation and examination primarily by the FIB. The Company's savings
bank subsidiary, Republic Savings, is subject to regulation and
examination primarily by the Ohio Superintendent of the Division of
Financial Institutions. As insured state banks, Republic Bank and
Republic Savings are also subject to regulation and examination by the
Federal Deposit Insurance Corporation ("FDIC").
These agencies and federal and state law extensively regulate various
aspects of the banking business including, among other things,
permissible types and amounts of loans, investments and other activities,
capital adequacy, branching, interest rates on loans and on deposits, the
maintenance of non-interest bearing reserves on deposit accounts, and the
safety and soundness of banking practices. The FDIC imposes capital
adequacy guidelines on Republic Bank and Republic Savings. Subject to
certain variations and exceptions, these guidelines are generally similar
to those of the Federal Reserve Board discussed above with respect to
bank holding companies.
4
As insured banks, Republic Bank and Republic Savings are subject to
uniform real estate lending regulations adopted by the Federal depository
institution regulatory agencies. These regulations require each
institution to adopt in writing comprehensive and appropriate real estate
lending policies, including underwriting standards and measurable loan to
value ratios which are consistent with safe and sound banking practice,
and documentation, approval and administration standards, all of which
are reviewed and approved annually by the institution's board of
directors. The regulations provide specific guidance on loan to value
ratios which are acceptable, ranging from a maximum of 65% for loans
secured by raw land up to 85% for loans secured by 1-4 family residential
construction or improved property. Although no maximum is prescribed for
home equity or 1-4 family permanent mortgage loans, the regulations
indicate that such loans equal to or in excess of a 90% ratio would be
expected to be supported by private mortgage insurance or readily
marketable collateral.
Banking laws and regulations also restrict transactions by insured
banks owned by a bank holding company, including loans to and certain
purchases from the parent holding company, non-bank and bank subsidiaries
of the parent holding company, principal shareholders, officers,
directors and their affiliates, and investments by the subsidiary bank in
the shares or securities of the parent holding company (or of any other
non-bank or bank affiliates), and acceptance of such shares or securities
as collateral security for loans to any borrower. The bank's regulators
also review other payments, such as management fees, made by the
subsidiary bank to affiliated companies.
Michigan and Ohio law, respectively, place specific limits on the
source and amount of dividends which may be paid by Republic Bank and
Republic Savings, respectively. The payment of dividends by the Company
and its bank subsidiaries is also affected by various regulatory
requirements and policies, such as the requirement to maintain adequate
capital above regulatory guidelines. The "prompt corrective action"
provisions of FDICIA impose further restrictions on the payment of
dividends by insured banks which fail to meet specified capital levels
and, in some cases, their parent bank holding companies.
FDICIA generally prohibits a depository institution from making any
capital distribution (including payment of a dividend) or paying any
management fee to its holding company if the depository institution would
thereafter be undercapitalized.
The FDIC may prevent an insured bank from paying dividends if the
bank is in default of payment of any assessment due to the FDIC. In
addition, payment of dividends by a bank may be prevented by the
applicable federal regulatory authority if such payment is determined, by
reason of the financial condition of such bank, to be an unsafe and
unsound banking practice. The Federal Reserve Board has issued a policy
statement providing that bank holding companies and insured banks should
generally only pay dividends out of current operating earnings.
These regulations and restrictions may limit the Company's ability to
obtain funds from its subsidiaries for its cash needs, including funds
for acquisitions, payment of dividends and interest and the payment of
operating expenses.
The Financial Institutions Reform, Recovery, and Enforcement Act of
1989 ("FIRREA") provides for cross-guarantees of the liabilities of
insured depository institutions pursuant to which any insured bank
subsidiary of a holding company may be required to reimburse the FDIC for
any loss incurred or reasonably anticipated to be incurred by the FDIC
after August 9, 1989 in connection with a default of any of such holding
company's other insured subsidiary banks or from assistance provided to
such other subsidiaries in danger of default. This right of recovery by
the FDIC generally is superior to any claim of the shareholders of the
depository institution that is liable or any affiliate of such
institution. The bank and savings bank subsidiaries of the Company are
subject to such cross-guarantees.
Among other things, FDICIA requires the federal depository
institution regulators to take prompt corrective action in respect of
depository institutions that do not meet minimum capital requirements.
The scope and degree of regulatory intervention is linked to the capital
category to which a depository institution is assigned.
Republic Bank is generally subject to FDIC deposit insurance
assessments paid to the Bank Insurance Fund ("BIF"). Republic Savings is
subject to FDIC deposit insurance assessments paid to the Savings
Association Insurance Fund ("SAIF"). Pursuant to FDICIA, the FDIC has
implemented a risk-based assessment scheme. Under this arrangement, each
depository institution is assigned to one of nine categories (based upon
three categories of capital adequacy and three categories of perceived
risk to the applicable insurance fund). Pursuant to the Omnibus
Consolidated Appropriations Act, 1997 ("OCAA"), a special one-time
assessment was made by the FDIC in October 1996, on SAIF-insured deposits
to bring the SAIF to its mandated reserve ratio of 1.25% of aggregate
SAIF-insured deposits by January 1, 1997. OCAA contemplates the merger of
the BIF and SAIF into a single Deposit Insurance Fund ("DIF") on January
1, 1999, under certain conditions. See "Recently Enacted and Proposed
Legislation."
5
3. Mortgage Subsidiary and Affiliates
The Company's non-depository mortgage banking subsidiary, Market Street,
and mortgage company affiliates, Republic Bancorp Mortgage and CUB
Funding, (collectively referred to as "the mortgage companies") are
engaged in the business of originating or purchasing, selling and
servicing mortgage loans secured by residential real estate. In the
origination of mortgage loans, the mortgage companies are subject to
State usury and licensing laws and to various federal statutes, such as
the Equal Credit Opportunity Act, Fair Credit Reporting Act, Truth in
Lending Act, Real Estate Settlement Procedures Act, and Home Mortgage
Disclosure Act, and the regulations promulgated thereunder, which
prohibit discrimination, specify disclosures to be made to borrowers
regarding credit and settlement costs, and regulate the mortgage loan
servicing activities of such entities, including the maintenance and
operation of escrow accounts and the transfer of mortgage loan servicing.
OCAA amended each of the foregoing federal statutes. See "Recently
Enacted and Proposed Legislation."
Market Street and CUB Funding purchase mortgage loans from approved
correspondents and brokers. They each perform their own underwriting
review of the mortgage loans purchased. Correspondents and brokers
qualify to participate in Market Street and CUB Funding's wholesale
program only after a review of their reputation, mortgage lending
experience and financial condition, including a review of references and
financial statements. In such activities, the mortgage companies are also
subject to applicable usury and other state and federal laws, including
various states' licensing statutes.
As sellers and servicers of mortgage loans, the mortgage companies
are participants in the secondary mortgage market with some or all of the
following: private institutional investors, FNMA, GNMA, FHLMC, VA and
FHA. In their dealings with these agencies, the mortgage companies are
subject to various eligibility requirements prescribed by the agencies,
including but not limited to net worth, quality control, bonding,
financial reporting and compliance reporting requirements. The mortgage
loans which they originate and purchase are subject to agency-prescribed
procedures, including without limitation inspection and appraisal of
properties, maximum loan-to-value ratios, and obtaining credit reports on
prospective borrowers. On some types of loans, the agencies prescribe
maximum loan amounts, interest rates and fees. When selling mortgage
loans to FNMA, FHLMC, GNMA, VA and FHA, each of the mortgage companies
represents and warrants that all such mortgage loans sold by it conform
to their requirements. If the mortgage loans sold are found to be
non-conforming mortgage loans, such agency may require the seller (i.e.,
Republic Bancorp Mortgage, Market Street or CUB Funding) to repurchase
the non-conforming mortgage loans. Additionally, FNMA, FHLMC, GNMA, VA
and FHA may require the mortgage companies to indemnify them against all
losses arising from their failure to perform their contractual
obligations under the applicable selling or servicing contract. Certain
provisions of the Housing and Community Development Act of 1992, and
regulations adopted thereunder may affect the operations and programs of
FNMA and FHLMC. See "Recently Enacted and Proposed Legislation."
4. Recently Enacted and Proposed Legislation
The Housing and Community Development Act of 1992 ("HCDA") established
housing goals for FNMA and FHLMC for low- and moderate-income housing,
special affordable housing, and central cities, rural areas, and other
under-served areas, each as defined by the Act. Each of FNMA and FHLMC is
required to (i) review its underwriting guidelines, (ii) take affirmative
steps to assist primary lenders such as the Company in making housing
credit available in areas with concentrations of low income and minority
families, (iii) collect expanded data from seller servicers on mortgage
loans (including race, gender and income of mortgagors), and (iv) assist
governmental agencies in investigations of, and take remedial actions
against, mortgage lenders violating the Fair Housing Act or Equal Credit
Opportunity Act.
Effective January 2, 1996, the Secretary of Housing and Urban
Development has adopted regulations governing FNMA and FHLMC, including
the establishment of housing goals. In general, the annual goals are
stated as a percentage of the number of dwelling units financed by each
agency's mortgage purchases during the year. The aggregate of the goals
for the HCDA - established categories for each of FNMA and FHLMC under
the proposed regulations are 73% for 1996, 80% for each of the years 1997
through 1999, with new annual goals to be adopted for 2000 and subsequent
years (pending which adoption, the 1999 standards would continue on an
interim basis).
6
HCDA also established the Office of Federal Housing Enterprise
Oversight ("OFHEO"), a new supervisory authority over FNMA and FHLMC. In
July 1996, OFHEO adopted final regulations implementing the minimum
capital and capital classification provisions of HCDA applicable to FNMA
and FHLMC. OFHEO is currently developing the components of a risk-based
capital regulation to be applied to the two companies. It is not possible
to predict the potential impact upon the Company, if any, of compliance
by FNMA and FHLMC with the requirements of HCDA and such regulations.
In 1994, the Congress enacted two major pieces of banking
legislation, the Riegle Act and the Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994 (the "Riegle-Neal Act"). The Riegle Act
addressed such varied issues as the promotion of economic revitalization
of defined urban and rural "qualified distressed communities" through
special purpose "Community Development Financial Institutions", the
expansion of consumer protection with respect to certain loans secured by
a consumer's home and reverse mortgages, and reductions in compliance
burdens regarding Currency Transaction Reports, in addition to reform of
the National Flood Insurance Program, the promotion of a secondary market
for small business loans and leases, and mandating specific changes to
reduce regulatory impositions on depository institutions and holding
companies.
The Riegle-Neal Act substantially changed the geographic constraints
applicable to the banking industry. Effective September 29, 1995, the
application of a bank holding company located in one State (the "home
State") to acquire a bank located in any other State (the "host State")
may be approved by the Federal Reserve Board under the BHC Act
notwithstanding any prohibition of such acquisition in the law of any
State. The Riegle-Neal Act permits States to require that a target bank
have been in operation for a minimum period, up to five years, and to
impose non-discriminatory limits on the percentage of the total amount of
deposits with insured depository institutions in the State which may be
controlled by a single bank or bank holding company. In addition, the new
Act imposes Federal deposit concentration limits (10% of nationwide total
deposits, and 30% of total deposits in the host State on applications
subsequent to the applicant's initial entry to the host State, subject to
waiver of the State deposit concentration limit in certain circumstances
by the host State), and adds new statutory conditions to Federal Reserve
Board approval, i.e., that the applicant meets or exceeds all applicable
Federal regulatory capital standards and is "adequately managed."
Also effective September 29, 1995, any bank subsidiary (and, in
certain circumstances thrift subsidiary) of a bank holding company may
receive deposits to existing accounts, renew time deposits, and close,
service and receive payments on (but not disburse proceeds of) loans, as
an agent for its depository institution affiliates without being
considered a branch of the affiliate under any otherwise applicable law.
Such agency activities must be conducted on terms consistent with safe
and sound banking practices.
The Riegle-Neal Act also authorizes, effective June 1, 1997, the
responsible Federal banking agency to approve applications for the
interstate acquisition of branches or mergers of depository institutions
across State lines without regard to whether such activity is contrary to
State law. Any State may, however, by adoption of a non-discriminatory
law after September 29, 1994 and before June 1, 1997, either elect to
have this provision take effect before June 1, 1997 (as Michigan and a
number of other States have already done) or opt-out of the provision.
The effect of opting out is to prevent banks chartered by, or having
their main office located in, such State from participating in any
interstate branch acquisition or merger. Each State is permitted to
prohibit interstate branch acquisitions (i.e., acquisition of a branch
without acquisition of the entire target bank), to examine acquired or de
novo branches of out-of-State banks with respect to compliance with
certain host State laws, and to retain a minimum age requirement of up to
five years, a non-discriminatory deposit cap, and non-discriminatory
notice or filing requirements. The responsible Federal agency will apply
the same Federal concentration limits and capital and management adequacy
requirements noted above with respect to BHC Act applications. Branches
acquired in a host State by a State-chartered bank will be subject to the
activity limits and other laws of the host State to the same extent as a
branch of a bank chartered by the host State. Branches acquired in a host
State by an out-of-State national bank will be subject to community
reinvestment, consumer protection, fair lending and intrastate branching
laws of the host State (except to the extent the application of such laws
to national banks is preempted by Federal law or is determined by the
Comptroller of the Currency to be discriminatory), and to other non-tax
laws of the host State to the same extent as branches of a national bank
having its main office in the host State. The establishment of de novo
branches by an out-of State bank will continue to require express
statutory authority under the law of the host State and of the chartering
jurisdiction.
7
Among other things, the Riegle-Neal Act also preserves State taxation
authority, prohibits the operation by out-of-State banks of interstate
branches as deposit production offices, imposes additional notice
requirements upon interstate banks proposing to close branch offices in a
low or moderate-income area, and creates new Community Reinvestment Act
evaluation requirements for interstate depository institutions. The Act
mandates new restrictions on interstate activities of foreign banks, and
requires public notice of, and opportunity to comment on, any proposed
ruling by a Federal banking agency which would preempt certain State
laws.
In November 1995, Michigan exercised its right to opt-in early to the
Riegle-Neal Act, and also permitted non-U.S. banks to establish branch
offices in Michigan. As further amended in 1996, the Michigan Banking
Code permits, in appropriate circumstances and with notice to, or the
approval of the Commissioner of the FIB, (i) the acquisition of Michigan-
chartered banks (such as Republic Bank) by FDIC-insured banks, savings
banks, or savings and loan associations located in other states, (ii) the
sale by a Michigan-chartered bank of one or more of its branches (not
comprising all or substantially all of its assets) to an FDIC-insured
bank, savings bank or savings and loan association located in a State in
which a Michigan-chartered bank could purchase one or more branches of
the purchasing entity, (iii) the acquisition by a Michigan-chartered bank
of an FDIC-insured bank, savings bank or savings and loan association
located in another State, (iv) the acquisition by a Michigan-chartered
bank of one or more branches (not comprising all or substantially all of
the assets) of an FDIC-insured bank, savings bank or savings and loan
association located in another State, (v) the consolidation of one or
more Michigan-chartered banks and FDIC-insured banks, savings banks or
savings and loan associations located in other States with the resulting
organization chartered either by Michigan or one of such other States,
(vi) the establishment by Michigan-chartered banks of branches located in
other States, the District of Columbia, or U.S. territories or protec-
torates, (vii) the establishment of branches in Michigan by FDIC-insured
banks located in other States, the District of Columbia or U.S. terri-
tories or protectorates having laws permitting a Michigan-chartered bank
to establish a branch in such jurisdiction, and (viii) the establishment
by foreign banks of branches located in Michigan. In 1996, the Michigan
Legislature enacted legislation authorizing formation of savings banks
chartered by the Commissioner of the FIB.
In July 1993, the President requested the Federal depository
institution regulatory agencies to re-focus their implementation of the
Community Reinvestment Act ("CRA") on more objective, performance-based
assessment standards that would minimize compliance burdens while
stimulating improved performance. Following a two-year process of
development, proposals, and public comment, the agencies jointly issued
completely revised CRA regulations in July 1995.
The new regulations will be applied in phases over a two-year
transition period. In general, the new rules require an evaluation of a
bank's actual performance in making home mortgage, small business, small
farm, and community development loans and qualified community development
investments, and in effectively delivering retail banking services, or,
at the option of the bank, the bank's accomplishment of a strategic plan
developed by the bank and previously approved by the responsible Federal
agency. The new regulations also alter record-keeping, reporting and
disclosure requirements, provide procedures for consideration of loans
made by affiliates, and provide more detailed, uniform definitions of the
performance ratings assigned to each institution by the responsible
Federal agency.
On March 8, 1994, the Interagency Task Force on Fair Lending, a body
consisting of the Federal depository institution regulators, the
Departments of Justice and Housing and Urban Development and four other
Federal agencies (including the OFHEO), issued a joint policy statement
on discrimination in lending. The policy statement applies to all
lenders, and provides an agreed basis for future agency rule-making and
administrative enforcement of various federal laws prohibiting lending
discrimination.
As part of the Omnibus Consolidated Appropriations Act ("OCAA"),
Congress (a) imposed a one-time special assessment on all SAIF-insured
deposits, (b) imposed on BIF-insured deposits a continuing assessment to
defray a portion of the cost of retiring bonds issued by the Financing
Corporation, and (c) upon satisfaction of certain conditions, mandated
the merger of the BIF and SAIF as a single fund (the "DIF") on January 1,
1999. OCAA also amended numerous federal laws regarding consumer credit,
including the Truth-In-Lending Act and the Real Estate Settlement
Procedures Act (to simplify consumer disclosures with respect to home
mortgage loans) and, effective September 30, 1997, the Fair Credit
Reporting Act (to permit bank holding companies and their subsidiaries to
share information concerning their customers, and also imposing duties on
businesses reporting information to credit bureaus).
Bills which would repeal certain of the investment banking
restrictions applicable to commercial banks under the Banking Act of
1933, commonly known as the Glass-Steagall Act are currently pending in
Congress. There can be no assurance whether, or in what form, any of
these bills will become law.
8
5. Regulation of Proposed Acquisitions
In general, any direct or indirect acquisition by the Company of any
voting shares of any bank which would result in the Company's direct or
indirect ownership or control of more than 5% of any class of voting
shares of such bank, and any merger or consolidation of the Company with
another bank holding company, will require the prior written approval of
the Federal Reserve Board under the BHC Act. In acting on such
applications, the Federal Reserve Board must consider various statutory
factors, including among others, the effect of the proposed transaction
on competition in relevant geographic and product markets, and each
party's financial condition, managerial resources, and record of
performance under the Community Reinvestment Act. Effective September 29,
1995, the BHC Act no longer prevents the Federal Reserve Board from
approving the acquisition by a bank holding company of a bank located in
another State because of contrary State law. See "Recently Enacted and
Proposed Legislation."
The merger or consolidation of an existing bank subsidiary of the
Company with another bank, or the acquisition by such a subsidiary of
assets of another bank, or the assumption of liability by such a
subsidiary to pay any deposits in another bank, will require the prior
written approval of the responsible Federal depository institution
regulatory agency under the Bank Merger Act, based upon a consideration
of statutory factors similar to those outlined above with respect to the
BHC Act. In addition, an application to, and the prior approval of, the
Federal Reserve Board may be required under the BHC Act, in certain such
cases.
Each of the foregoing types of applications is subject to public
notice and comment procedures, and, in many cases, to prior notice and/or
approval of State bank regulatory authorities. Adverse public comments
received, or adverse considerations raised by the regulatory agencies,
may delay or prevent consummation of the proposed transaction. In
addition, such a transaction generally may not be consummated before the
thirtieth calendar day (or if the Attorney General has made no adverse
comment to the Federal Reserve Board thereon, such shorter period not
less than 15 calendar days as the Board may specify with the concurrence
of the Attorney General) after final approval of the transaction by the
Federal depository institution regulatory agency.
As amended by OCAA in 1996, the BHC Act now permits bank holding
companies (such as the Company) which satisfy statutory criteria as
well-managed and well-capitalized and which own well-capitalized and
well-managed depository institution subsidiaries, subject to certain
limitations based upon a percentage of assets and capital and without
prior notice to or approval of the Federal Reserve Board, to engage de
novo in activities previously determined by regulation of the Board to be
so clearly related to banking as to be a proper incident thereto. Such
bank holding companies must provide a written notice to the Board within
10 days of commencing such an activity. In addition, such bank holding
companies may, subject to similar limitations, engage de novo in
non-banking activities already approved by the Board by order, or acquire
companies engaged in any such non-banking activity, upon 12 business
days' prior written notice to the Board.
Bank holding companies not satisfying the statutory criteria, and any
bank holding company proposing a transaction not meeting the asset and
capital limitations or involving a non-banking activity not yet approved
by regulation or order of the Federal Reserve Board, must provide prior
written notice to the Board, generally 60 days in advance of the proposed
transaction.
In evaluating a written notice of such a transaction, the Federal
Reserve Board will consider various factors, including among others the
financial and managerial resources of the notificant, and the relative
public benefits and adverse effects which may be expected to result from
the performance of the activity by an affiliate of the Company. The Board
may apply different standards to activities proposed to be commenced de
novo and activities commenced by acquisition, in whole or in part, of a
going concern. The required notice period may be extended by the Board
under certain circumstances, including a notice for acquisition of a
company engaged in activities not previously approved by regulation of
the Board. This required regulatory written notice is subject to public
notice and comment procedures, and adverse public comments received, or
adverse considerations raised by regulatory agencies, may delay or
prevent consummation of such an acquisition. If such a proposed
acquisition is not disapproved or subjected to conditions by the Board
within the applicable notice period, it is deemed approved by the Board.
Such an acquisition may also require 30 days' prior notice to the
Department of Justice and the Federal Trade Commission.
9
ITEM 2. PROPERTIES
The executive offices of the Company are located in a two-story building
at 1070 East Main Street in Owosso, Michigan. At December 31, 1996, the
Company had 36 banking locations, of which 17 are owned and 19 are leased,
and 70 mortgage loan production offices, all of which are leased except one
which is owned. All of these offices are considered by management to be well
maintained and adequate for the purpose intended. Refer to Notes
7 and 17 in the Notes to Consolidated Financial Statements incorporated by
reference into Item 8 of this document for further information on properties.
ITEM 3. LEGAL PROCEEDINGS
The Company and its subsidiaries are parties to certain ordinary, routine
legal actions and proceedings in the normal course of business. Although
litigation is subject to many uncertainties and the ultimate outcome with
respect to these matters cannot be ascertained, management does not believe
that the aggregate liability, if any, resulting from such actions would have
a material adverse affect on the Company's financial condition, results of
operations or liquidity.
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 1996.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
For information regarding the Company's Common Stock, including the
quarterly high and low sales price as reported on the Nasdaq Stock Market and
cash dividends declared and paid, refer to the "Summary of Common Share
Market Data," on page 27 of the registrant's 1996 Annual Report to
Shareholders and "Table 1. Five Year Summary of Selected Financial Data," on
page S-1 of the registrant's 1996 Annual Report Supplement to the 1997 Proxy
Statement, herein incorporated by reference. There were 4,785 shareholders of
record of the Company's common stock and approximately 13,500 total
shareholders as of March 7, 1997.
ITEM 6. SELECTED FINANCIAL DATA
The information set forth in "Table 1. Five Year Summary of Selected
Financial Data," on page S-1 of the registrant's 1996 Annual Report
Supplement to the 1997 Proxy Statement is herein incorporated by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information set forth in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on pages S-2 to S-19 of the
registrant's 1996 Annual Report Supplement to the 1997 Proxy Statement is
herein incorporated by reference.
10
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information set forth in the Consolidated Financial Statements and
the Notes to the Consolidated Financial Statements, together with the report
thereon by Deloitte & Touche LLP, on pages S-20 to S-47 of the registrant's
1996 Annual Report Supplement to the 1997 Proxy Statement is herein
incorporated by reference.
The unaudited information presented in the "Quarterly Data" table on page
27 of the registrant's 1996 Annual Report to Shareholders is herein
incorporated by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There were no changes in or disagreements with accountants on accounting
and financial disclosure as defined by Item 304 of Regulation S-K.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors
The information set forth under the caption "Board of Directors" on pages
10 to 11 of the registrant's 1997 Proxy Statement is herein incorporated by
reference.
Executive Officers
The following is a list of all the executive officers (5) of the Company
as of March 1, 1997. There are no family relationships between any of the
executive officers.
Officer
Name Age Title Since
- ---- --- ----- -------
Jerry D. Campbell.................. 56 Chairman of the Board and 1985
Chief Executive Officer
Dana M. Cluckey.................... 37 President and Chief Operating Officer 1986
Barry J. Eckhold................... 50 Vice President and Chief Credit Officer 1990
Thomas F. Menacher................. 40 Senior Vice President, Treasurer and
Chief Financial Officer 1992
George E. Parker, III.............. 62 General Counsel and Corporate Secretary 1997
ITEM 11. EXECUTIVE COMPENSATION
The information set forth under the captions "Personnel, Compensation and
Nominating Committee Report" on pages 13 to 16 and "Compensation of Executive
Officers" on pages 17 to 18 of the registrant's 1997 Proxy Statement is
herein incorporated by reference.
11
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth under the caption "Voting Securities" on pages
7 to 9 of the registrant's 1997 Proxy Statement is herein incorporated by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth under the caption "Certain Relationships and
Related Transactions" on page 19 of the registrant's 1997 Proxy Statement is
herein incorporated by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Data incorporated by reference from the registrant's 1996 Annual
Report Supplement to the 1997 Proxy Statement:
Page
----
Consolidated Balance Sheets, December 31, 1996 and 1995 S - 20
Consolidated Statements of Income for the years ended
December 31, 1996, 1995 and 1994 S - 21
Consolidated Statements of Shareholders' Equity for the years ended
December 31, 1996, 1995 and 1994 S - 22
Consolidated Statements of Cash Flows for the years ended
December 31, 1996,1995 and 1994 S - 23 to S - 24
Notes to Consolidated Financial Statements S - 25 to S - 45
Independent Auditors' Report S - 47
2. All financial statement schedules required by Article 9 of Regulation
S-X have been included in the consolidated financial statements or
are either not required or not applicable.
3. All applicable exhibits are included in (c) below.
(b) No reports on Form 8-K were filed during the fourth quarter of 1996.
(c) Exhibits
3(a) Articles of Incorporation are incorporated herein by reference to
Exhibit 3(a) to Form 10K filed March 17, 1994.
3(b) Bylaws, as amended, are incorporated herein by reference to Exhibit
3(b) to Registration Statement on Form S-4 filed March 1, 1990,
Registration No. 33-33811.
4(a) Debenture Purchase Agreement dated as of March 30, 1994, between the
Company and Scudder, Stevens & Clark, Inc., Business Men's Assurance
Company of America, Columbus Life Insurance Company and Mutual of
America Life Insurance Company, related to 7.17% Senior Debentures
due 2001, filed as Exhibit 4(p) to Form 10-K filed March 27, 1995,
is incorporated herein by reference.
4(b) Debenture Purchase Agreement dated as of January 29, 1996, between
the Company and American United Life Insurance, State Life Insurance
Co., Mutual of America Life Insurance Co., GNA, Mega Life & Health
Insurance Co. and Provident Mutual Life Insurance Company, related
to 6.75% Senior Debentures due January 15, 2001 and 6.95% Senior
Debentures due January 15, 2003, filed as Exhibit 4(c) to Form 10-K
filed March 29, 1996, is incorporated herein by reference.
10(a)Non-Qualified Stock Option Plan of the Company, effective March 24,
1986, as amended and restated, filed as Exhibit 10(b) to Form 10-K
filed March 23, 1993, is incorporated herein by reference.
12
10(b)1997 Stock Option Plan of the Company, effective January 16, 1997,
subject to shareholder approval.
10(c)Restricted Stock Plan of the Company, effective March 24, 1986, as
amended and restated.
10(d)Form of Indemnity Agreement and Schedule of officers and directors
of the Company who executed such agreements, filed as Exhibit 10(e)
to Form S-2 filed February 28, 1992, Registration No. 33-46069, is
incorporated herein by reference.
10(e)Directors Compensation Plan of the Company, adopted by the Board of
Directors on October 15, 1992, filed as Exhibit 10(e) to Form 10-K
filed March 23, 1993, is incorporated herein by reference.
10(f)Deferred Compensation Plan of the Company, adopted by the Board of
Directors on December 16, 1993, filed as Exhibit 10(e) to Form 10-K
filed March 17, 1994, is incorporated herein by reference.
10(g)First Amended and Restated Agreement and Plan of Reorganization,
dated as of October 29, 1992, by and between the Company and Horizon
Financial Services, Inc., filed as Exhibit 2 to Form 8-K filed
November 6, 1992, is incorporated herein by reference.
10(h)Agreement and Plan of Merger between the Company and Premier
Bancorporation, Inc., dated as of March 31, 1993, filed as Exhibit
28(c) to Form 10-K filed March 17, 1994, is incorporated herein by
reference.
10(i)Purchase and Sale Agreement by and between Republic Bancorp Inc.
("Purchaser") and California United Bank, National Association
("Seller"), dated October 22, 1993, filed as Exhibit 28(e) to Form
10-K filed March 17, 1994, is incorporated herein by reference.
10(j)Purchase and Sale Agreement by and between Republic Bank ("Seller")
and CB North ("Purchaser"), dated as of September 27, 1994, filed as
Exhibit 28(g) to Form 10-K filed March 27, 1995, is incorporated
herein by reference.
10(k)Form of Servicing and Disposition Agreement for Inventory and
Construction Loan Portfolio, dated November 21, 1992 between Market
Street Mortgage Corporation and the Company, filed as Exhibit 2(b)
to Form 8-K filed November 23, 1992, is incorporated herein by
reference.
11. Statement re: computation of per share earnings is herein
incorporated by reference to Note 12 of the Notes to Consolidated
Financial Statements included in the Company's 1996 Annual Report
Supplement to the 1997 Proxy Statement, filed herewith as Exhibit
13.
13. 1996 Annual Report to Shareholders and 1996 Annual Report Supplement
to the 1997 Proxy Statement.
21. Subsidiaries of the Registrant are herein incorporated by reference
to Note 1 of the Notes to Consolidated Financial Statements included
in the Company's 1996 Annual Report Supplement to the 1997 Proxy
Statement, filed herewith as Exhibit 13.
23. Consent of Deloitte & Touche LLP, independent auditors, to
incorporation by reference to its report dated January 16, 1997
appearing in the Company's Annual Report on Form 10-K for the year
ended December 31, 1996 and into the Company's Registration
Statements on Form S-8 dated December 4, 1992, Registration No.
33-55336, and Form S-8 dated December 4, 1992, Registration No.
33-55304, and Form S-8 dated May 10, 1993, Registration No.
33-62508, and the Company's Registration Statement on Form S-3 dated
May 26, 1993, Registration No. 33-61842.
27. Financial Data Schedule containing summary financial information
extracted from the consolidated balance sheet as of December 31,
1996, consolidated statement of income for the year ended December
31, 1996, and accompanying notes thereto, as well as Management's
Discussion and Analysis included in the registrant's 1996 Annual
Report Supplement to the 1997 Proxy Statement.
13
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, on the 21st day
of March 1997.
/s/ Jerry D. Campbell /s/ Thomas F. Menacher
- --------------------- ----------------------
Jerry D. Campbell Thomas F. Menacher, CPA
Chairman of the Board Senior Vice President, Treasurer
and Chief Executive Officer and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
registrant and in the capacity of Directors of the Company on the 21st day of
March 1997.
/s/ Jerry D. Campbell
- ---------------------------- ---------------------------
Jerry D. Campbell Stephen M. Klein
/s/ Dana M. Cluckey /s/ John J. Lennon
- ---------------------------- ---------------------------
Dana M. Cluckey John J. Lennon
/s/ Bruce L. Cook /s/ Sam H. McGoun
- ---------------------------- ---------------------------
Bruce L. Cook Sam H. McGoun
/s/ Richard J. Cramer
- ---------------------------- ---------------------------
Richard J. Cramer Kelly E. Miller
/s/ George A. Eastman /s/ Joe D. Pentecost
- ---------------------------- ---------------------------
George A. Eastman Joe D. Pentecost
/s/ Howard J. Hulsman /s/ George B. Smith
- ---------------------------- ---------------------------
Howard J. Hulsman George B. Smith
/s/ Jeoffrey K. Stross
- ---------------------------- ---------------------------
Gary Hurand Jeoffrey K. Stross
/s/ Dennis J. Ibold
- ----------------------------
Dennis J. Ibold
14
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