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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

REPUBLIC BANCSHARES, INC.

(Exact Name of Registrant As Specified In Its Charter)

(727) 823-7300
(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12 (b) of the Act: None
Securities registered pursuant to Section 12 (g) of the Act:

Title of each Class
Common Stock, par value $2.00

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.

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 of the Registrant, based upon the average bid and asked prices, was approximately $128,650,000, on February 29, 2000. As of that date, there were 10,555,889 shares of the Registrant’s Common Stock, par value $2.00 per share, issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Company’s Proxy Statement for the 2000 Annual Meeting of Stockholders are incorporated by reference into Parts I, II, III, and IV of this report.

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PART I

Item 1. BUSINESS

Republic Bancshares, Inc. (the “Company” or “Republic” or “We”) is a bank holding company registered with the Board of Governors of the Federal Reserve System under the Bank Holding Company Act of 1956 as amended. We conduct business mainly through our banking subsidiary, Republic Bank (the “Bank”), a Florida-chartered commercial bank headquartered in St. Petersburg, Florida. We provide a broad range of traditional commercial banking services, emphasizing commercial real estate and business lending. Previously, mortgage banking activities comprised a significant portion of our business, but at the end of 1998 we significantly reduced the size and scope of our mortgage banking operations. Based on the most recent available data, we are the third largest independent commercial bank holding company headquartered in Florida. At December 31, 1999, our branch network consisted of 81 branches throughout Florida and the Company’s consolidated assets totaled $2.6 billion, portfolio loans totaled $1.9 billion, deposits totaled $2.3 billion and stockholders’ equity was $170.2 million. The Bank’s activities are regulated by the Florida Department of Banking and Finance (the “Department”) and the Federal Deposit Insurance Corporation (the “FDIC”). Deposits are insured by the FDIC up to applicable limits, and the Bank is a member of the Federal Home Loan Bank of Atlanta (the “FHLB”).

Background and Prior Operating History

In May 1993, the Company underwent a change of control. More than 99.0% of the outstanding common stock was acquired by William R. Hough and John W. Sapanski, both directors of the Company. Afterward a program was implemented to expand our branches and lines of business. In December 1993 the first of these expansions was completed through our acquisition of 12 branches from Crossland Savings, F.S.B., a federal stock savings bank. We assumed deposit liabilities of $327.7 million, purchased loans secured by real estate and purchased foreclosed properties amounting to $201.6 million. During the latter part of 1994 and throughout 1995, we continued this strategy by increasing our retail banking presence on the west coast of Florida. We opened 13 new branches, increasing our market presence in existing counties and expanding into Pasco County. At the same time, we undertook a program of purchasing residential mortgage loans, primarily from the FDIC at substantial discounts from face value, as a means of deploying the excess liquidity from new deposits until internal loan growth was sufficient to absorb the liquidity. We converted to a holding company structure in February 1996.

Also in 1996 residential lending capabilities were expanded by adding loan production offices in Florida, Boston, Massachusetts, and Irvine, California. The residential loan product line was also expanded to include government-insured first mortgage loans and high loan-to-value debt consolidation and home improvement loans secured by junior liens on real estate (“High LTV Loans”). In the fourth quarter of 1996, a wholesale lending operation was added that purchased residential loans from third-party originators for resale. We sold or securitized a substantial portion of the loans that the newly-formed mortgage banking division originated, and the first securitization of High LTV Loans was completed in December 1997.

While building the mortgage banking operation, we also expanded our commercial banking operations. In January 1997, we opened a new branch in Hernando County. In April 1997, we acquired Firstate Financial, F.A., a thrift institution headquartered in Orlando, Florida, for a cash purchase price of $5.5 million. That acquisition increased our presence in central Florida, where we previously operated a commercial loan production facility but had no branches.

In September 1997, we acquired and merged with F.F.O. Financial Group, Inc. (“FFO”), St. Cloud, Florida, the holding company parent of First Federal Savings and Loan Association of Osceola County, in a stock-for-stock transaction. Mr. Hough was the controlling shareholder of FFO. That merger further increased our presence in central Florida by adding 11 branches in Brevard, Orange and Osceola Counties. At the time of the merger, FFO had total assets of $328.4 million, total loans of $222.4 million and total deposits of $281.3 million.

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In June 1998, we acquired three branch offices from BankAmerica (formerly NationsBank, N.A.) and four branch offices of NationsBank’s then-affiliate, Barnett Bank, N.A., all of which were located in Florida, including the branch’s loans and other assets. At acquisition, the seven branches had deposit liabilities of $199.9 million and loans of $114.4 million. On August 20, 1998, we acquired an additional Barnett branch located in Brunswick, Georgia, with the office becoming an interstate branch of the Company’s newly chartered savings bank, Republic Bank, F.S.B. (the “Savings Bank”). At acquisition, the Georgia Branch had deposit liabilities of $16.9 million and loans of $7.5 million. We paid a combined deposit and loan premium of $24.0 million for all of the branches that were acquired.

On August 13, 1998, we purchased a branch office in Deerfield Beach (Broward County), Florida from the Dime Savings Bank, F.S.B. In the transaction, the Company acquired $61,000 of loans, $100,000 of personal property and equipment located at the branch and assumed $206.7 million of deposits. The purchase price for this branch was $9.8 million.

On November 5, 1998, we acquired and merged with Bankers Savings Bank, F.S.B., Coral Gables, Florida, in a stock-for-stock transaction. At the date of acquisition, Bankers Savings Bank, which operated two branches in Dade County, had total assets of $70.0 million, total loans of $46.2 million and total deposits of $61.1 million.

On the same date, we also acquired Lochaven Federal Savings and Loan Association, a one branch, federally chartered thrift in Orlando, Florida in a stock-for-stock acquisition. At the date of acquisition, Lochaven had total assets of $56.5 million, total loans of $44.8 million and total deposits of $54.0 million.

In the fourth quarter of 1998 we significantly reduced the size and scope of our mortgage banking activities due to turmoil in the financial markets, particularly the High LTV and nonconforming mortgage loan segments, and reduced liquidity levels in the High LTV Loan sector of the asset-backed securities markets. During the latter part of November 1998, the Company’s normal conduits for sale and/or securitization of High LTV Loans and nonconforming first mortgage loans suddenly became unavailable due to those liquidity problems. Rather than dispose of High LTV Loans and nonconforming mortgages we had originated at distressed prices resulting from the illiquid market, we elected to hold those loans in our portfolio. We also ceased originating High LTV Loans and virtually eliminated origination of nonconforming first mortgage loans. We closed out-of-state loan production offices and ceased all telemarketing efforts that were the source of the majority of the loan originations by our mortgage banking unit. At year-end 1998, we recorded a restructuring charge of $6.7 million, primarily for severance benefits payable to mortgage banking employees whose positions were eliminated, and an $818,000 charge for legal and other costs not includable as part of the restructuring charge.

During 1998, we entered into a series of purchase, lease assumption and sublease agreements with BankAmerica under which we purchased three former NationsBank branch offices and leased 22 former branches of NationsBank and Barnett Bank that had been closed in connection with the merger of NationsBank and Barnett. These branch office sites are located throughout the State of Florida. Two of the purchased branch offices are in Hillsborough County and the third is in Lee County. The leased offices are in Broward, Clay, Collier, Dade, Marion, Palm Beach, Pinellas and Volusia Counties. We paid BankAmerica $3.8 million for the three purchased offices and, in addition to assuming the lease obligations, paid approximately $3.0 million (for furniture, fixtures and equipment and certain real estate and as a premium) in connection with the lease assumption transactions. We had opened three of these branch offices by the end of 1998. During 1999 we opened the remaining branch offices, continuing the expansion of our commercial banking activities while continuing to shrink residential mortgage lending efforts.

On September 10, 1999, we sold the Brunswick, Georgia office of the Savings Bank to Sapelo National Bank (“Sapelo”) for a gain of $1.1 million. In the transaction, Sapelo acquired all of the deposits and fixed assets associated with the Brunswick office. Simultaneously with the branch sale, the Savings Bank sold its loan portfolio to the Bank and was dissolved.

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Subsequent Events

Appointment of Chief Executive Officer

On March 8, 2000, the board of directors of the Company and the Bank announced the appointment of Mr. William R. Klich as President and Chief Executive Officer of the Company and the Bank, effective March 15, 2000. Mr. Klich, 55, has 30 years of banking experience and was the chief executive for Coast Bank, F.S.B., located in Sarasota, Florida, from 1990-1993. After Coast Bank was acquired by SunTrust Banks in mid-1993, Mr. Klich remained with SunTrust Bank, Gulf Coast, as its Corporate Banking Executive. In early 1996 he was promoted to his current position as Chairman and Chief Executive Officer of the $2.4 billion SunTrust Bank, Gulf Coast, serving Manatee, Sarasota and Charlotte Counties.

Mr. Klich will be appointed to the Bank’s board of directors effective March 15, 2000, and is expected to become a member of the Company’s board of directors at its annual stockholders meeting in April 2000. Messrs. William R. Hough and Alfred T. May will continue to serve as Chairman of the Company’s board of directors and as Chairman of the Bank’s board of directors, respectively.

Mortgage Warehouse Lending

In another matter, on March 8, 2000, the Company announced that in recent weeks operational deficiencies in its warehouse lending department, which makes loans to mortgage originators secured by an inventory of loans held for sale, had come to its attention. Management is instituting workout plans for several borrowers that may include an amended repayment schedule, substitute collateral, additional collateral or a combination thereof. Based on information the Company has at this time, it is uncertain as to whether it will incur any losses on its warehouse loans or, if so, the extent of any losses that may be incurred. At this time, management believes that its allowance for loan losses at December 31, 1999 was adequate.

Business of Republic Bancshares, Inc.

Our principal business strategies now include:

	•		continuing to expand our commercial real estate lending
	•		expanding business lending, including introducing a small business lending program
	•		increasing consumer lending through our branch system with an emphasis on home equity lending
	•		increasing market share of deposits through internal growth
	•		emphasizing commercial and retail checking relationships
	•		increasing our range of commercial banking and retail-oriented products and services

While pursuing these strategies, management remains committed to improving asset quality, managing interest rate risk and enhancing profitability.

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Sources of Funds

Our primary source of funds for lending, investment, and other general business purposes are deposit accounts. In addition to deposits, another principal source of funds are loan repayments. The Bank’s mortgage portfolio contains a significant amount of seasoned loans that are anticipated to repay rapidly during the next few years. If necessary, additional funding is available by borrowing from the FHLB, which has been granted a blanket lien on our residential loan portfolio as collateral. We do not foresee needing to rely on brokered deposits. To the extent that short-term financing is required, we intend to rely on repurchase agreements, FHLB advances, and other traditional money market sources of funding. For additional discussion of asset/liability management policies and strategies, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Asset/Liability Management.”

We offer a full range of deposit services, including checking and other transaction accounts, savings accounts, and time deposits. At December 31, 1999, we had no brokered deposits and time deposits in amounts of $100,000 or more constituted 11.08% of total deposits.

The following table shows the principal types of deposit accounts we offer and the aggregate amounts of those accounts at December 31, 1999 ($ in thousands):

At December 31, 1999, scheduled maturities of total time deposits were as follows ($ in thousands):

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Lending Activities

We originate a full range of traditional lending products for our portfolio. In recent years origination of High LTV Loans comprised a major part of our lending efforts, but we discontinued originating that product in the first quarter of 1999. Additionally, we closed the out-of-state lending offices that were part of the now-discontinued mortgage banking operations.

During 1999 and in the future, we will continue to take advantage of our expertise in commercial real estate and multifamily residential lending. Our new business initiatives will be directed toward increasing consumer and business loans, with residential lending comprising a lesser part of our lending activities. In 1999, we introduced a small business loan production program targeted at businesses with gross sales under $5 million.

For 1999, loan originations from all product types totaled $626.2 million. Of this amount, originations of commercial real estate and commercial (business) loans totaled $365.1 million, consumer loan originations (primarily home equity loans) totaled $96.8 million and residential loan originations were $164.3 million.

The following tables show information concerning our loan portfolio, based on total dollars and percent of portfolio, by collateral type as of the dates indicated ($ in thousands):

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The following table shows the maturities of our real estate and commercial loans at December 31, 1999 and 1998. Loans having no stated schedule of repayments and no stated maturity are reported as due in one year or less. This table also shows the dollar amount of loans scheduled to mature after one year, according to their interest rate characteristics ($ in thousands):

Credit Administration

Our loan approval process provides for various levels of lending authority to loan officers, the Officers’ Loan Committee, the Chairman, and the Chief Executive Officer. In addition, loans in excess of $3.0 million require the approval of the Board of Directors’ Loan Committee or a majority of the full Board prior to funding. Loan purchases are made subject to the same underwriting standards as loan originations. To achieve consistency in underwriting policies and procedures, we have centralized the supervision of our loan approval process and all credit decision functions.

Our real estate lending consists of extensions of credit secured by real estate mortgages and loans made for the purpose of financing the construction of a building or other improvements to real estate, regardless of whether a lien has been taken on the property. Using applicable regulatory guidelines as our basis, we have adopted comprehensive written real estate lending policies that we believe are consistent with safe and sound banking practices. These lending policies reflect consideration of the Interagency Guidelines for Real Estate Lending Policies (the “Guidelines”) adopted by the federal banking agencies in December 1992, which set forth applicable standards for real estate lending.

Our lending policy addresses certain lending considerations set forth in the Guidelines, including loan-to-value (“LTV”) limits, loan administration procedures, underwriting standards, portfolio diversification standards and documentation, approval and reporting requirements. The LTV ratio framework, with a LTV ratio being the total amount of credit to be extended divided by the appraised value or purchase price of the property at the time the credit is originated, has been established for each category of real estate loans. Our policy, subject to certain approval exceptions, establishes, among other things, the following LTV limits: raw land (65%); land development (75%); construction (commercial, multifamily and non-residential) (80%) and improved property (85%). For portfolio purposes, loans on one-to-four family residential (owner occupied) mortgages where the LTV exceeds 95% are not made, and any LTV ratio in excess of 80% generally requires appropriate insurance or additional security from readily marketable collateral. The Board of Directors reviews and approves the Company’s lending policies at least annually.

Our commercial (business) lending is based on a strategy of extending credit to the Florida business community, with commercial loans being made to corporate and commercial businesses and to borrowers with satisfactory cash flows.

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We manage our loan portfolio on an ongoing basis following written portfolio management strategies, guidelines for underwriting standards and risk assessment, and procedures for ongoing identification and management of credit deterioration. We undertake regular portfolio reviews to estimate loss exposure and determine compliance with policies (see — “Asset Quality”).

Asset Quality

Allowance/Provision for Loan Losses

The allowance for loan losses represents our estimate of an amount adequate to provide for probable losses inherent in the loan portfolio based on historical data for the Company and the current status of the loan portfolio. However, there may be additional risks of losses in the future, which cannot be quantified precisely or attributed to particular loans or classes of loans. Because those risks include general economic trends, as well as available information about conditions affecting individual borrowers, our estimate of the allowance needed is necessarily approximate and imprecise. The allowance is also subject to regulatory examinations and determinations as to adequacy, which may take into account such factors as the methodology used to calculate the allowance and the size of the allowance in comparison to peers identified by the regulatory agencies.

We conduct an ongoing evaluation and grading of the loan portfolio according to an eight-point rating system. The loan ratings serve as a guideline in assessing the risk level of a particular loan and provide a basis for the estimation of the overall allowance necessary based on historical experience. The Loan Review Department independently rates loans and, on a quarterly basis, meets with senior management and the loan officers to discuss all loans, that have been identified for potential credit quality problems. The Loan Review Department reports its findings to the Directors’ Audit Committee to ensure independence of the loan grading function.

We believe that our loan loss allowance policy is consistent with policies established by federal and state regulatory agencies and that the level of our allowance is appropriate in light of our historical loss experience. Provisions for loan losses charged to expense during each period are made based on our estimation of the adequacy of the allowance when compared to the inherent risk of the existing portfolio. As part of the risk assessment for certain loans purchased from 1993 through 1997, we allocated a portion of the discount on such loan purchases to the allowance in amounts which are consistent with our loan loss allowance policy guidelines. Amounts resulting from discount allocation to the allowance related to specific pools of purchased loans are available to absorb potential losses only on those purchased loans and are not available to cover losses on other loans. At December 31, 1999, $1.6 million of the loan loss allowance resulted from allocations of loan discount with the $26.6 million remainder resulting from provisions to the allowance. At December 31, 1999, the amount of unearned discount on purchased loans, which had not been allocated to the allowance, totaled $3.4 million.

Loan loss allowance activity during 1999 included $9.6 million of loan charge-offs (net of recoveries), $470,000 reallocated from the allowance to loan discounts and a $9.9 million provision for loan losses. Activity during 1998 included a $14.3 million provision for loan losses, loan charge-offs (net of recoveries) of $3.9 million and $4.3 million reallocated from the allowance to loan discounts as a result of lower-than-expected charge-offs in these portfolios.

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The following table shows information concerning the activity in the allowance for loan losses during the periods indicated ($ in thousands):

The following table shows the allocation of the allowance based on certain subjective estimates and the percent of the loan portfolio for each category presented. The amount allocated to a particular segment should not be construed as the only amount available for future charge-offs that might occur within that segment. In addition, the amounts allocated by segment may not be indicative of future charge-off trends. The allocation of the allowance may change from year to year should we determine that the risk characteristics of the loan portfolio and off-balance sheet commitments have changed.

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Nonperforming Assets

Nonperforming assets include:

•		loans which are 90 days or more past due and have been placed into non-accrual status;
•		accruing loans that are 90 days or more delinquent that are deemed by management to be adequately secured and in the process of collection;
•		restructured loans that have not yet demonstrated a sufficient payment history to warrant return to performing status and therefore, are not accruing interest;
•		Other Real Estate (“ORE”) (i.e., real estate acquired through foreclosure or deed in lieu of foreclosure) and other assets acquired in satisfaction of a loan.

All delinquent loans are reviewed on a regular basis and are placed on non-accrual status when, in our opinion, the possibility of collecting additional interest is deemed insufficient to warrant further accrual. As a matter of policy, interest is not accrued on loans past due 90 days or more unless the loan is both well secured and in process of collection. When a loan is placed in non-accrual status, interest accruals cease and uncollected accrued interest is reversed and charged against current income. Additional interest income on such loans is recognized only when received.

Loans classified as non-accrual totaled $25.0 million at December 31, 1999, compared with $35.6 million at December 31, 1998, a decrease of $10.6 million. Nonperforming one-to-four family residential loans at year-end 1999 decreased $5.1 million and commercial real estate and multifamily loans decreased $8.1 million, while nonperforming commercial (business) loans declined $515,000. At December 31, 1999 and 1998, we had non-performing assets (including loans classified as non-accrual) of $31.2 million or 1.22% of total assets and $42.8 million or 1.71% of total assets, respectively. Accruing loans, which were 90 days past due amounted to $171,000 at December 31, 1999 and $1.2 million at December 31, 1998, and primarily consisted of loans in process of renewal. (See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Comparison of Balance Sheets at December 31, 1999 and 1998.”)

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The following table shows information regarding the components of nonperforming assets at the dates indicated ($ in thousands):

Other Real Estate Acquired Through Foreclosure

All ORE assets are recorded at the lower of cost or estimated fair market value less selling costs based on appraisal information that is updated when a property is taken into ORE and, thereafter, when determined appropriate by management but no less than annually.

The following table shows information regarding ORE balances, net of allowances, as of the dates indicated ($ in thousands):

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Troubled Debt Restructurings

In a troubled debt restructuring (“TDR”), the creditor allows the debtor certain concessions that would not normally be allowed, such as modifying the terms of the debt to a basis more favorable than those offered to other creditors or accepting third-party receivables in lieu of the debt. At December 31, 1999 and 1998, the loan portfolio included TDR’s amounting to $1.2 million and $411,000, respectively. All restructured loans, as of December 31, 1999 and 1998, were performing loans.

Investment Activities

Florida statutes require that a specified minimum amount of liquid assets be maintained based primarily on the level of deposits. At December 31, 1999, the amount of liquid assets maintained exceeded the regulatory minimum.

Employees

At December 31, 1999, we had 1,000 full-time equivalent employees, none of whom were represented by a union or other collective bargaining agreement.

Market Area

As of December 31, 1999, we operated 81 full-service branches throughout Florida. As a multi-branch institution, our market area encompasses all of the counties in which we operate.

Most of our branches are in Metropolitan Statistical Areas (“MSA”). A MSA is defined by the U.S. Census Bureau as a geographic area with a significant population nucleus, along with any adjacent communities that have a high degree of economic and social integration with the nucleus. More than half of our branches are in the two MSA’s which anchor the west coast of Florida: (1) Tampa-St. Petersburg-Clearwater, which includes Hillsborough, Hernando, Pasco and Pinellas Counties; and (2) Sarasota-Bradenton, comprised of Manatee and Sarasota Counties. As of January 1999, the latest date estimates were available, the Tampa-St. Petersburg MSA had a population of 2.3 million and the Sarasota-Bradenton MSA had a population of 571,000. Together, the two MSA’s had a combined population of 2.9 million residents, which would rank approximately 12th in the United States. Light industry and service businesses, a large and growing segment of retirees support the economic base of the MSA’s in which we have branches, and by tourism, which is highly seasonal.

Florida is a highly competitive state for financial services of all kinds. Competition for deposits also exists from money market funds and credit unions. Consumers can choose from a wide range of suppliers of personal credit, including credit card companies, consumer finance companies, credit unions and mortgage bankers, as well as from competing financial institutions.

We ranked 12th among holding companies and 15th among all depository institutions in the state of Florida in terms of deposits held as of June 30, 1999, the latest date for which data is available. As the following table indicates, market share ranges from 11.62% in Osceola County to .03% in Hillsborough County.

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Branch Deposits in Florida by County
($ in thousands)

Market Risk

The market risk inherent in market sensitive instruments is the potential loss arising from changes in interest rates and the changes in prices of marketable equity securities. One of our primary objectives is to reduce fluctuations in net interest income caused by changes in interest rates. To manage interest rate risk, the Board of Directors has established interest-rate risk policies and procedures, which delegate to the Asset/Liability Committee the responsibility to monitor and report on interest-rate risk, devise strategies to manage interest-rate risk, monitor loan originations and deposit activity, and approve pricing strategies.

Securities available for sale, which are those securities that may be sold prior to maturity as part of asset/liability management or in response to other factors, are carried at fair value with any valuation adjustment reported in a separate component of stockholders’ equity, net of tax effect. Trading securities include a subordinate tranche from a 1998 securitization of High LTV Loans, the resulting residual interest in cash flows from that securitization, from a securitization completed in 1997, and the excess spread on interest only-strips receivable. Trading securities are carried at market value with any unrealized gains or losses included in the statement of operations under “Gain on securities, net”. Securities held to maturity are carried at amortized cost.

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For a description of the key assumptions used by us to measure market risk, see the discussion on interest sensitivity analysis under the caption “Asset/Liability Management.”

The table below shows principal amounts and related average interest rates, by year of maturity or repricing, for market sensitive instruments as of December 31, 1999 ($ in thousands).