-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B+O29oTnlojRZv9nx9JVb41AtNB4S8Y9x9WkHsDoRxBON93OHnB4USMYE4NiF07g A7rM8wtLO035HTNLqBhEGQ== 0000932384-03-000197.txt : 20030701 0000932384-03-000197.hdr.sgml : 20030701 20030701160339 ACCESSION NUMBER: 0000932384-03-000197 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20020630 FILED AS OF DATE: 20030701 FILER: COMPANY DATA: COMPANY CONFORMED NAME: REPUBLIC CORP /TX/ CENTRAL INDEX KEY: 0000202995 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 740911766 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-08597 FILM NUMBER: 03768184 BUSINESS ADDRESS: STREET 1: 5340 WESLAYAN STREET 2: PO BOX 270462 CITY: HOUSTON STATE: TX ZIP: 77277 BUSINESS PHONE: 7136229727 MAIL ADDRESS: STREET 1: 5340 WESLAYAN P O BOX 270462 STREET 2: 5340 WESLAYAN P O BOX 270462 CITY: HOUSTON STATE: TX ZIP: 77277 10-Q/A 1 a512670.txt 6-30-02 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A Amendment No. 1 QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Six Months Ended June 30, 2002 Commission File Number 0-8597 THE REPUBLIC CORPORATION TEXAS 74-0911766 ------ ---------- (STATE OF OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 5340 WESLAYAN - P.O. BOX 270462, HOUSTON, TX 77277 ----------------------------------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 713-993-9200 Indicate by check mark whether the registrant (1) has filed all reports required 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 report(s), and (2) has been subject to such filing requirements for the past 90 days. YES X NO --- ---- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of June 30, 2002 Common Stock, $1.00 Par Value Shares 356,844 - ----------------------------- ------- Outstanding at June 30, 2002, (including 23,119 shares held as treasury shares) THE REPUBLIC CORPORATION FORM 10-Q/A EXPLANATORY NOTE We are filing this Amendment No. 1 to The Republic Corporation's Quarterly Report on Form 10-Q for the period ended June 30, 2002, to restate in their entirety Items 1, 2 and 3 of Part I and Item 6 of Part II in order to restate our consolidated balance sheet as of December 31, 2001 and June 30, 2002 and make the corresponding adjustments throughout such quarterly report. For completeness purposes, the full Form 10-Q is filed herein; however, no other portions of the original Form 10-Q have been amended. The restatement relates to deferred income taxes which had not been properly recorded in prior periods. We plan to file as soon as reasonably practicable amendments to our Form 10-Ks for the fiscal years ended December 31, 2001 and 2000 and amendments to the Form 10-Qs filed in these fiscal years to restate the financial statements included in these reports to reflect the correct treatment of deferred income taxes and make related adjustments. This amendment does not reflect events occurring after the filing of the original Quarterly Report on Form 10-Q filed on July 31, 2002, or modify or update the disclosures presented in the original Form 10-Q, except to reflect the revisions described above.
THE REPUBLIC CORPORATION Index to Quarterly Report on Form 10-Q Page ---- Part I. Financial Information Item 1. Financial Statements (unaudited) Consolidated Balance Sheets December 31, 2001, and June 30, 2002 (Restated). 1 Consolidated Statements of Income for the three months and six months ended June 30, 2001 and 2002. 2 Consolidated Statements of Cash Flows for the six months ended June 30, 2001 and 2002. 3 Notes to Financial Statements 4 Item 2. Management's Discussion and Analysis 5-9 Item 3. Quantitative and Qualitative Disclosures about Market Risk 9 Part II. Other Information 10 Signatures 11 Certification 11
REPUBLIC CORPORATION AND SUBSIDIARY Balance Sheets (Restated) (Restated) June 30 December 31 2002 2001 ------------ ------------ Assets Cash and due from banks (demand).............. $ 5,730,283 $ 6,740,872 Investment securities: Held-to-maturity Market value at 6-30-02 28,046,793 ---------- Market value at 12-31-01 33,036,515..... 27,557,937 32,639,115 ---------- Available-for-sale Market value at 6-30-02 24,000 ------ Market value at 12-31-01 24,000..... 24,000 24,000 ------ ------------ ------------ $ 33,312,220 $ 39,403,987 ------------ ------------ Loans......................................... 110,682,357 113,289,960 Plus: Uncollected earned interest......... 883,870 815,911 Less: Allowance for losses............... (1,763,000) (1,612,000) ------------ ------------ Net loans and other receivables............ 109,803,227 112,493,871 ------------ ------------ Federal funds sold............................ 35,550,000 21,975,000 Property, equipment and vehicles (net)........ 3,112,065 3,175,287 Other real estate............................. 252,079 254,732 Deferred Income Taxes 473,970 473,970 Goodwill...................................... 436,079 436,079 Other assets.................................. 534,206 403,645 ------------ ------------ Total assets............................... $183,473,846 $178,616,571 ============ ============ Liabilities and Stockholders' Equity Deposits (Domestic): Demand (non-interest bearing).............. $ 20,740,342 $ 21,085,881 Savings, time and demand (Interest-bearing)....................... 144,873,064 140,557,986 ------------ ------------ $165,613,406 $161,643,867 Accounts payable and accrued interest payable....................................... 978,408 1,002,190 Accrued taxes payable......................... 391,495 57,357 Total liabilities ......................... 166,983,309 162,703,414 ------------ ------------ Minority Interest in Consolidated Subsidiary.. 474,606 419,519 ------------ ------------ Stockholders Equity Common stock (par value $1; 750,000 shares authorized, 356,844 shares issued including stock held in treasury at 6-30-02 and 12-31-01)................................ 356,844 356,844 Additional paid-in capital.................... 234,931 234,931 Less cost of treasury stock (23,119 shares at 6-30-02 and 23,119 at 12-31-01)......... (91,303) (91,303) ------------ ------------ Total contributed capital................ 500,472 500,472 ------------ ------------ Retained earnings............................. 15,515,459 14,993,166 ------------ ------------ Net Unrealized Gain (Loss) on Securities Available-for-Sale (Net of Taxes).......... -0- -0- Stockholders' equity..................... 16,015,931 15,493,638 ------------ ------------ Total liabilities and stockholders equity.. $183,473,846 $178,616,571 ============ ============
The accompanying note is an integral part of these financial statements. -1-
REPUBLIC CORPORATION AND SUBSIDIARY Statements of Income Three Months Ended Six Months Ended --------------------------- --------------------------- June 30 June 30 June 30 June 30 2002 2001 2002 2001 ----------- ---------- ---------- ---------- Interest Income Interest and fees on loans ........ $ 2,267,411 $2,618,164 $4,608,469 $5,211,931 ----------- ---------- ---------- ---------- Interest on funds sold and securities purchased under agreement to resell.............. 153,104 170,059 258,196 275,741 Interest and dividends on investments Securities of U.S. Government and government agencies....... 302,442 294,604 660,638 813,757 Obligations of states, political subdivisions and other obligations secured by the government ............... 28,410 58,517 57,621 58,517 ----------- ---------- ---------- ---------- Total interest on investments.... 483,956 523,180 976,455 1,148,015 ----------- ---------- ---------- ---------- Total interest income............ $ 2,751,367 $3,141,344 $5,584,924 $6,359,946 ----------- ---------- ---------- ---------- Interest expense: Interest on deposits .............. 1,016,853 1,441,706 2,084,212 3,000,148 ----------- ---------- ---------- ---------- Total Interest expense .......... 1,016,853 1,441,706 2,084,212 3,000,148 ----------- ---------- ---------- ---------- Net interest income ............... 1,734,514 1,699,638 3,500,712 3,359,798 Provision for loan losses ............ (40,313) (37,891) (242,174) (85,532) ----------- ---------- ---------- ---------- Net interest income after provision for loan losses ...... $ 1,694,201 $1,661,747 $3,258,538 $3,274,266 ----------- ---------- ---------- ---------- Other income: Service charges on deposit accounts ........................ 48,917 55,393 87,659 110,564 Other service charges, commission and fees.............. 128,537 228,932 220,825 369,682 Gain on sale of securities......... -0- -0- -0- -0- Net income - other real estate... 2,999 -0- 2,999 -0- Other income ...................... 107,994 52,520 187,510 65,579 ----------- ---------- ---------- ---------- Total other income .............. $ 288,447 $ 336,845 $ 498,993 $ 545,825 ----------- ---------- ---------- ---------- Other expenses: Salaries and wages ................ 530,088 482,937 1,055,820 954,270 Employee benefits ................. 119,475 115,227 279,973 252,812 Net occupancy expenses ............ 181,903 154,553 248,339 222,128 Furniture and equipment expenses... 17,832 38,765 47,438 75,180 Depreciation ...................... 88,425 72,481 172,572 143,585 Computer service center............ 148,449 104,556 284,956 215,111 FDIC-assessment.................... (45) 6,666 14,079 20,992 Professional services.............. 28,327 46,945 100,528 98,645 Advertising........................ 51,058 39,350 98,281 59,691 Other operating expenses .......... 307,328 275,231 555,292 587,052 ----------- ---------- ---------- ---------- Total other expenses ............ $ 1,472,840 $1,336,711 $2,857,278 $2,629,466 ----------- ---------- ---------- ---------- Income before income taxes....... 509,808 661,881 900,253 1,190,625 Less applicable income taxes (Current)........................ 161,000 234,000 360,050 439,000 ----------- ---------- ---------- ---------- Income before reduction for 348,808 427,881 540,203 751,625 minority interest............. Less minority interest income (loss)........................... 12,488 12,570 17,910 23,241 ----------- ---------- ---------- ---------- Net income ...................... $ 336,320 $ 415,311 $ 522,293 $ 728,384 =========== ========== ========== ========== Earnings per share .............. $ 1.01 $ 1.24 1.57 $ 2.18
The accompanying note is an integral part of these financial statements. -2-
REPUBLIC CORPORATION AND SUBSIDIARY Statements of Cash Flows Six Months Ended ----------------------------- June 30 June 30 2002 2001 ----------- ----------- Cash flows and operating activities: Net income (loss).......................... $ 522,293 $ 728,384 ----------- ----------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation............................. 172,572 143,585 Provision for loan losses................ 242,174 85,532 Amortization (accretion) of discounts and premium ................ 81,178 (440,172) Other real estate gains/net.............. (2,999) -0- Investment Securities gains/net.......... -0- -0- Loss on sale of subsidiary stock......... 31,377 -0- Re-appraisal - other real estate......... -0- -0- (Decrease) increase in interest payable............................... (23,782) (199,228) (Increase) decrease in interest receivable............................ (67,959) (160,801) (Increase) decrease in other assets...... (130,561) (273,592) Increase (decrease) in other liabilities........................... 352,848 498,497 ----------- ----------- Total adjustments ............................ $ 654,848 $ (346,179) ----------- ----------- Net cash provided by (used in) operating activities ......................... $ 1,177,141 $ 382,205 ----------- ----------- Cash flows from investing activities: Proceeds from sales of subsidiary stock.... 5,000 20,000 Purchase of subsidiary stock............... -0- (10,000) Proceeds from maturities of investment securities............................... 5,000,000 15,000,000 Purchase of investment securities.......... -0- (5,000,000) Net (increase) decrease in loans made to customers........................ 2,426,081 (3,683,678) Capital expenditure........................ (109,350) (595,058) Proceeds from sale of other real estate.... 96,000 -0- ----------- ----------- Net cash provided by (used in) investing activities ...................... $7,417,731 $ 5,731,264 ----------- ----------- Cash flows from financing activities Net increase (decrease) in demand deposits, NOW account, savings accounts and certificates of deposit..... 3,969,539 (856,672) Purchase of treasury stock.................... -0- -0- ----------- ----------- Net cash provided by (used in) financing $ 3,969,539 $ (856,672) ----------- ----------- Net increase (decrease) in cash and cash equivalents ...................... $12,564,411 $ 5,256,797 ----------- ----------- Cash and cash equivalents at beginning of year: Cash and due from banks.................... 6,740,872 5,813,679 Federal funds sold......................... 21,975,000 10,800,000 ----------- ----------- Cash and cash equivalents at beginning of year.......................... $28,715,872 $16,613,679 ----------- ----------- Cash and cash equivalents at June 30, 2002 Cash and due from banks.................... 5,730,283 4,645,476 Federal funds sold......................... 35,550,000 17,225,000 ----------- ----------- Cash and cash equivalents at June 30, 2000.............................. $41,280,283 $21,870,476 =========== =========== Supplemental disclosures of cash flow information: Cash paid for interest..................... 1,016,123 3,199,376 Cash paid for income tax................... 384,384 427,000
The accompanying note is an integral part of these financial statements. -3- REPUBLIC CORPORATION AND SUBSIDIARY Notes to Consolidated Financial Statements June 30, 2002 Note 1 -- BASIS OF PREPARATION AND PRESENTATION The consolidated financial statements included herein have been prepared by The Republic Corporation, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission and include all adjustments which are, in the opinion of management, necessary for a fair presentation. The condensed consolidated financial statements include the accounts of the Company and its subsidiary. The condensed consolidated balance sheet of the Company as of December 31, 2001 has been derived from the audited consolidated balance sheet of the Company as of that date. The balance sheet as of December 31, 2001 and June 30, 2002 has been restated to reflect the previously unrecorded deferred income tax asset of $473,970, and the corresponding increases in the minority interest in the Company's consolidated subsidiary by $10,838 and retained earnings by $463,132.Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The Republic Corporation believes that the disclosures are adequate to make the information presented not misleading; however, it is suggested that these financial statements be read in conjunction with the financial statements and the notes thereto which are on Form 10-K for the fiscal year ended December 31, 2001. The financial data for the interim periods may not necessarily be indicative of results to be expected for the year. Securities that will be held for indefinite periods of time, including securities that will be used as part of the Company's asset/liability management strategy and that may be sold in response to changes in interest rates, prepayments, and similar factors, are classified as Available-for-Sale and accounted for at fair value. -4- MANAGEMENT'S DISCUSSION AND ANALYSIS FINANCIAL CONDITION ASSET QUALITY Non-accrual loans, following a first quarter dip, continued to climb, primarily a result of delayed contract payments to a commercial borrower and the resulting past due status of this and a small number of other commercial credits. Restructured loans are higher due to renegotiated monthly payments on a small number of five figure consumer home loans and one five figure commercial loan. (Please see Table 1, PROBLEM ASSETS) During the first half of 2002, a period during which total loans outstanding declined $2,608m, the bank experienced an increase in loans secured by 1-4 family residences of $1,525m and a decrease in commercial real estate loans of $4,163m. During the same period, commercial and industrial loans increased $851m and consumer installment loans decreased $589m. (Please see Table 2 LOAN CONCENTRATIONS)
TABLE 1 PROBLEM ASSETS December 31 (dollars in thousands) June 30 ------------------------------------ 2002 2001 2000 1999 --------- --------- --------- --------- Nonaccrual loans $ 1,244 $ 1,008 $ 1,076 $ 837 Past-due loans (over 90 days) -0- -0- 149 -0- Restructured loans 199 81 781 1,022 --------- --------- --------- --------- Total problem loans $ 1,443 $ 1,089 $ 2,006 $ 1,859 Foreclosed assets Real estate 252 255 38 43 In-substance foreclosures -0- -0- -0- -0- Other 8 -0- 17 23 --------- --------- --------- --------- Total Problem Assets $ 1,703 $ 1,344 $ 2,061 $ 1,925 ========= ========= ========= ========= Total problem loans as a percentage of total loans 1.3% 1.0% 1.8% 1.9% Total problem assets as a percentage of total loans and foreclosed ass 1.5% 1.2% 1.8% 2.0%
TABLE 2 LOAN CONCENTRATIONS December 31 (dollars in thousands) June 30 ---------------------- 2002 2001 2000 --------- --------- --------- Commercial $ 8,275 $ 7,424 $ 7,361 Agricultural 1,407 1,754 3,029 Real Estate-Construction 3,161 3,262 8,122 Real Estate-Mortgage 87,195 89,617 84,256 Installment loans to Individuals 10,644 11,233 11,210 --------- --------- --------- Totals $110,682 $113,290 $113,978 ========= ========= =========
-5- SOURCES AND USES OF FUNDS The first half of 2002 was characterized by deposit growth of $3,970m and a decline in loans outstanding of $2,608m. This, coupled with proceeds from a matured government agency security of $5,000m, caused a $12,564m increase in cash and cash equivalents. This is arguably in part a result of more competitive offering rates on the bank's deposit offerings than is the case with regard to offering rates on commercial real estate loans. (Please see Statement of Cash Flows, P-3) LIQUIDITY The accumulation of liquidity over the past 12 months leveled off in the second quarter of 2002. At June 30, 2002, the bank's holdings of cash and due from banks, readily marketable securities and federal funds sold totaled approximately 41% of total liabilities, compared with 38% at year-end 2001 and 29% at mid-year 2001. (Please see Balance Sheet, P-1) INTEREST RATE SENSITIVITY MANAGEMENT In the ordinary course of business, the company is exposed to the risk of loss from changes in interest rates. The majority of this risk has to do with timing differences related to the repricing of assets and liabilities. The company, through its ALCO committee, analyzes and compares these repricing differences and basis point spreads so as to effectively monitor and adjust the inevitable earnings impact of rate change. The objective, over time, is to minimize this earnings impact in all interest rate environments and not to attempt to anticipate or time the market. The primary tools to accomplish this are absolute pricing level decisions on both sides of the balance sheet, so as to address the imbedded "basis risk", as well as overt adjustment to the timing of repricing events, so as to address "term risk", as a matter of policy. The modeling used internally consists of 100 basis point and 400 basis point earnings impact estimates. The instruments that the company typically adjusts in this regard are loans, securities held to maturity, federal funds sold and deposit liabilities. Based on the current repricing structure, it is anticipated that the company has sufficient tools in place to minimize or eliminate any adverse earning impact caused by interest rate change. The company does not invest in derivative financial instruments such as futures, forwards, swaps, options and other financial instruments with similar characteristics and there is negligible direct risk of adverse impacts resulting from changes in foreign currency exchange rates, commodity prices or prices of equity securities. (Please see Repricing Schedule, P-7 and Investment Securities, P-8) -6-
INTEREST RATE SENSITIVITY MANAGEMENT Table 3 - REPRICING SCHEDULE 6-30-02 3 Mos 3-12 1-3 Over (dollars in thousands) or Less Months Years 3 Years ----------- --------- ---------- --------- RATE SENSITIVE ASSETS (Assets that can be repriced within X days) Loans * 15,877 31,579 17,978 44,955 Federal Funds Sold 35,550 -0- -0- -0- Taxable Securities ** -0- 5,000 20,000 -0- Municipal Bonds -0- -0- -0- 2,295 ----------- --------- ---------- --------- TOTAL 51,427 36,579 37,978 47,250 =========== ========= ========== ========= RATE SENSITIVE LIABILITIES (Liabilities that can be repriced within X days) Time Certificates of Deposit 35,541 42,860 3,758 -0- NOW Accounts 1,978 -0- -0- -0- Super NOW Accounts 36,370 -0- -0- -0- Savings Accounts 9,880 -0- -0- -0- MMDA Accounts 15,166 -0- -0- -0- ----------- --------- ---------- --------- TOTAL 98,935 42,860 3,758 -0- =========== ========= ========== ========= Interest Rate Sensitivity Gap (47,508) (6,281) 34,220 47,250 Cumulative Interest Rate Sensitivity Gap (47,508) (53,789) (19,569) 27,681
* Does not include overdrawn demand deposits of $17 thousand ** Does not include $24 thousand in Federal Reserve Bank stock -7- INVESTMENT SECURITIES
TABLE 4 (dollars in thousands) Carrying Unrealized Unrealized Market Value Gains Losses Value ------------ ------------ ------------ ------------ JUNE 30, 2002 (1) Held-to-Maturity: U.S. Treasury Securities - - - - Other 27,557,937 488,856 - 28,046,793 (2) Available-for-Sale Securities Carried at Fair Value: U.S. Treasury Securities - - - - Other 24,000 - - 24,000 ------------ ------------ ------------ ------------ 27,581,937 488,856 - 28,070,793 ------------ ------------ ------------ ------------ DECEMBER 31, 2001 (1) Held-to-Maturity: U.S. Treasury Securities - - - - Other 32,639,115 397,400 - 33,036,515 (2) Available-for-Sale Securities Carried at Fair Value: U.S. Treasury Securities - - - - Other 24,000 - - 24,000 ------------ ------------ ------------ ------------ 32,663,115 397,400 - 33,060,515 ------------ ------------ ------------ ------------ DECEMBER 31, 2000 (1) Held-to-Maturity: U.S. Treasury Securities - - - - Other 31,961,129 270,094 - 32,231,223 (2) Available-for-Sale Securities Carried at Fair Value: U.S. Treasury Securities - - - - Other 24,000 - - 24,000 ------------ ------------ ------------ ------------ 31,985,129 270,094 - 32,255,223 ------------ ------------ ------------ ------------
(1) Securities which the Bank has the ability and intent to hold to maturity. These securities are stated at cost, adjusted for amortization of premiums and accretion of discounts, computed by the interest method. Because securities are purchased for investment purposes and quoted market values fluctuate during the investment period, gains and losses are recognized upon disposition or at such time as management determines that a permanent impairment of value has occurred. Cost of securities sold is determined on the specific identification method. (2) Securities that the bank may sell in response to changes in market conditions or in the balance sheet objectives of the bank. Securities in this category will be reported at fair market value. Unrealized gains or losses (net of tax) will be reported as a separate item in the shareholder's equity section of the balance sheet. Adjustments will be recorded at least quarterly. -8- CAPITALIZATION: The decline in total loans, together with the shift away from commercial real estate and the increase in outstanding home loans, has caused a significant increase in both risk-based capital ratios during the first half of 2002. The increase in the leverage ratio during the same period was more modest and was a by-product of the percentage growth in retained earnings exceeding the percentage growth in assets. (Please see Table 5 CAPITAL)
TABLE 5 - CAPITAL (Restated) (Restated) *June 30 December 2002 2001 ---------- ---------- Tier 1 risk-based capital 16.17% 15.30% (minimum is 4%) Tier 1 + Tier 2 risk based 17.43% 16.56% capital (minimum is 8%) Tier 1 leverage (minimum is 8.71% 8.65% 3%) *ESTIMATE
RESULTS OF OPERATIONS NET INTEREST INCOME All interest income and expense accounts for the first half of 2002 are lower than the corresponding figures for the prior year period, a result of declines in market interest rates to 40 year lows. The bank generated approximately $141m more in net interest income during the current six month period, an effect that is tapering due to the continued repricing in the loan portfolio. (Please see Balance Sheet, P-1 and Statement of Income, P-2) OTHER INCOME AND EXPENSE Bank results thus far in 2002 continue to be significantly influenced by the approximately $157m larger provision for loan losses compared with the first half of 2001. The larger provision was made in response to a slower economy and a conservative application of loan classification criteria to the bank's portfolio. Net losses taken thus far are approximately $91m and this total consists almost entirely of consumer installment loans. Non-interest income is lower in the current period due to the effect of lower transaction volume in the lending area on fee income. Higher costs for third party computing and item processing, advertising and marketing costs and salaries and employee benefits accounted for most of the increases in total, non interest expense in the first half of 2002. (Please see Statement of Income, P-2) QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK See INTEREST RATE SENSITIVITY MANAGEMENT on page 7. -9- PART II OTHER INFORMATION Item 1. LEGAL PROCEEDINGS not applicable Item 2. CHANGES IN SECURITIES not applicable Item 3. DEFAULTS UPON SENIOR SECURITIES not applicable Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS not applicable Item 5. OTHER INFORMATION not applicable Item 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits 99.1 Certificate of Chief Executive and Chief Financial Officer pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002) b) No reports on Form 8-K have been filed during the quarter for which this report was filed. -10- SIGNATURES Pursuant to the requirements 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. THE REPUBLIC CORPORATION Date: June 30, 2003 /s/ J. ED EISEMANN, IV --------------------------------------- Chairman of the Board Date: June 30, 2003 --------------------------------------- Director CERTIFICATION I, J. Ed Eisemann, IV, certify that: 1. I have reviewed this quarterly report on Form 10-Q/A of the Republic Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make statements made, in the light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; and 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report. Date: June 30, 2003 /s/ J. ED EISEMANN, IV ------------- ----------------------------------------- J. Ed Eisemann, IV Chairman of the Board, Director, Chief Executive Officer, Chief Financial and Accounting Officer -11- EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 99.1 Certificate of Chief Executive and Chief Financial Officer pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002) -12- EX-99 3 a512930.txt CERTIFICATE 6-30-02 EXHIBIT 99.1 I, J. Ed Eisemann, IV, Chief Executive and Chief Financial Officer of The Republic Corporation (the Registrant), do hereby certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, with respect to this Quarterly Report on Form 10-Q/A for the period ended June 30, 2002 of the Registrant (the "Report"), that to the best of my knowledge: (1) The Report fully complies with the requirement of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of the Registrant. This certification is made solely for purposes of 18 U.S.C. Section 1350 and not for any other purpose.
/s/ J. ED EISEMANN, IV June 30, 2003 - ------------------------ Chief Executive and Chief Financial ----------------- J. Ed Eisemann, IV Officer Date
A SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906 HAS BEEN PROVIDED TO THE REPUBLIC CORPORATION AND WILL BE RETAINED BY THE REPUBLIC CORPORATION AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST. -----END PRIVACY-ENHANCED MESSAGE-----