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

|                                            |  |                            
|------------------------------------------- |  | ---------------------------
|For the fiscal year ended
December 31, 2000 |  | Commission File
No. 0-27652

REPUBLIC BANCSHARES, INC.(Exact Name of Registrant As Specified In Its Charter)

|                                                                       |  |                                             
|---------------------------------------------------------------------- |  | --------------------------------------------
|FLORIDA
(State or other jurisdiction of
incorporation or organization) |  | 59-3347653
(IRS Employer
Identification No.)

|                                                                      |  |                 
|--------------------------------------------------------------------- |  | ----------------
|111 2nd Avenue N.E., St. Petersburg, FL
(Address of Principal Office) |  | 33701
(Zip Code)

(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.

|        |  |         
|------- |  | --------
|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 of the Registrant, based upon the average bid and asked prices,
was approximately $139,207,000 on February 27, 2001. As of that date, there
were 10,555,989 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 2001 Annual Meeting of
Stockholders are incorporated by reference into Part III of this report.





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TABLE OF CONTENTS

PART I

|         |  |                                                                                       |  |  |    | 
|-------- |  | ------------------------------------------------------------------------------------- |  |  | -- | 
|Item 1.  |  | BUSINESS                                                                             
|        
|        
|        
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|         |  | Background and Prior Operating History                                                |  |  | 1  | 
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|         |  | Subsequent Events                                                                     |  |  | 3  | 
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|         |  | Business of Republic Bancshares, Inc.                                                 |  |  | 3  | 
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|         |  | Sources of Funds                                                                      |  |  | 3  | 
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|         |  | Lending Activities                                                                    |  |  | 4  | 
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|         |  | Credit Administration                                                                 |  |  | 5  | 
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|         |  | Asset Quality                                                                         |  |  | 6  | 
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|         |  | Troubled Debt Restructurings                                                          |  |  | 10 | 
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|         |  | Investment Activities                                                                 |  |  | 10 | 
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|         |  | Employees                                                                             |  |  | 10 | 
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|         |  | Market Area                                                                           |  |  | 10 | 
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|         |  | Market Risk                                                                           |  |  | 11 | 
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|         |  | Supervision and Regulation                                                            |  |  | 13 | 
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|         |  | Effects of Inflation                                                                  |  |  | 18 | 
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|         |  | Changes in Accounting Standards                                                       |  |  | 18 | 
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|Item 2.  |  | PROPERTIES                                                                            |  |  | 19 | 
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|Item 3.  |  | LEGAL PROCEEDINGS                                                                     |  |  | 26 | 
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|Item 4.  |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                   |  |  | 26 | 
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|         |  | PART II                                                                              
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|Item 5.  |  | MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS                 |  |  | 27 | 
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|Item 6.  |  | SELECTED CONSOLIDATED FINANCIAL DATA                                                  |  |  | 27 | 
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|Item 7.  |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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|         |  | Years Ended December 31, 2000 and 1999                                                |  |  | 29 | 
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|         |  | Years Ended December 31, 1999 and 1998                                                |  |  | 34 | 
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|         |  | Asset/Liability Management and Liquidity                                              |  |  | 39 | 
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|Item 8.  |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                           |  |  | 43 | 
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|Item 9.  |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE  |  |  | 43 | 
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|         |  | PART III                                                                             
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|Item 10. |  | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                    |  |  | 43 | 
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|Item 11. |  | EXECUTIVE COMPENSATION                                                                |  |  | 44 | 
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|Item 12. |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                        |  |  | 44 | 
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|Item 13. |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                        |  |  | 44 | 
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|         |  | PART IV                                                                              
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|Item 14. |  | EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K                      |  |  | 44 | 

TABLE OF CONTENTS




|                                                   |                                                                                               |  |  |  |  |  |  | 
|-------------------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                            
|                                                   | Item 1. BUSINESS                                                                             
|                                                   | Background and Prior Operating History                                                       
|                                                   | Subsequent Events                                                                            
|                                                   | Business of Republic Bancshares, Inc.                                                        
|                                                   | Sources of Funds                                                                             
|                                                   | Lending Activities                                                                           
|                                                   | Credit Administration                                                                        
|                                                   | Asset Quality                                                                                
|                                                   | Troubled Debt Restructurings                                                                 
|                                                   | Investment Activities                                                                        
|                                                   | Employees                                                                                    
|                                                   | Market Area                                                                                  
|                                                   | Market Risk                                                                                  
|                                                   | Supervision and Regulation                                                                   
|                                                   | Effects of Inflation                                                                         
|                                                   | Changes in Accounting Standards                                                              
|                                                   | Item 2. PROPERTIES                                                                           
|                                                   | Item 3. LEGAL PROCEEDINGS                                                                    
|                                                   | Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|PART II                                           
|                                                   | Item 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                
|                                                   | Item 6. SELECTED CONSOLIDATED FINANCIAL DATA                                                 
|                                                   | Item 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                                   | Years Ended December 31, 2000 and 1999                                                       
|                                                   | Years Ended December 31, 1999 and 1998                                                       
|                                                   | Asset/Liability Management and Liquidity                                                     
|                                                   | Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                          
|                                                   | Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 
|PART III                                          
|                                                   | Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                  
|                                                   | Item 11. EXECUTIVE COMPENSATION                                                              
|                                                   | Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                      
|                                                   | Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                      
|PART IV                                           
|                                                   | Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K                     
|Consent of Independent Certified Public Accountant





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Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

Certain statements contained in this Annual Report on Form 10-K (other than the
financial statements and statements
of historical fact), including, without limitation, statements as to our
expectations and beliefs presented under the captions Letters to Our
Stockholders and Managements Discussion and Analysis of Financial Condition
and Results of Operations, may constitute forward-looking statements.
Forward-looking statements are made based upon our expectations and beliefs
concerning future events, many of which, by their nature are inherently
uncertain and outside of the Companys control. It is possible that the
Companys actual results and financial condition may differ, possibly
materially, from the anticipated results and financial condition indicated in
these forward-looking statements.

We wish to caution readers that the assumptions which form the basis for
forward-looking statements with respect to or that may impact earnings for the
year ending December 31, 2001, and thereafter include many factors that are
beyond our ability to control or estimate precisely. Some factors include the
market demand and acceptance of our existing and new loan and deposit products,
the impact of competitive products, and changes in economic conditions, such as
inflation or fluctuations in interest rates.

While we periodically reassess material trends and uncertainties affecting our
results of operations and financial condition in connection with our
preparation of the stockholders letter and managements discussion and
analysis contained in our annual report, we do not intend to review or revise
any particular forward-looking statement referenced herein in light of future
events.

[Balance of page intentionally left blank]





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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 and
provide a broad range of traditional commercial banking services. Based on
the most recent available data, we are the second largest commercial bank
holding company headquartered in Florida. At December 31, 2000, our branch
network consisted of 80 branches throughout Florida and our consolidated
assets totaled $2.4 billion, portfolio loans totaled $1.7 billion, deposits
totaled $2.2 billion and stockholders equity was $172.3 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

During the latter part of 1994 and throughout 1995, the Bank increased its
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, we initiated a mortgage banking operation. Our mortgage banking
operation placed an emphasis on non-traditional mortgage products such as high
loan-to-value mortgages (High LTV Loans). In the fourth quarter of 1998,
normal conduits for sale and/or securitization of High LTV Loans and
nonconforming first mortgage loans became unavailable due to turmoil in the
financial markets and reduced liquidity levels in the High LTV loan sector of
the asset backed securities market. 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 that mortgage banking unit. At year-end
1998, a restructuring charge of $6.7 million was recorded, primarily for
severance benefits payable to mortgage banking employees whose positions were
eliminated. We ceased originating High LTV Loans and eliminated origination
of other types of high-risk residential mortgage products.

During 1997 and 1998, our retail banking franchise expanded via our
acquisition of Firstate Financial, F.A., a thrift institution headquartered in
Orlando, Florida and, 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. 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.

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. We also
acquired an additional Barnett branch located in Brunswick, Georgia, which has
since been sold. We paid a combined deposit and loan premium of $24.0 million
for all of those 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, we
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.

1



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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 Miami-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.

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. Those branch office sites were 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,
Miami-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, certain real estate and a premium) in connection with
the lease assumption transactions. We had opened three of these branch offices
by the end of 1998 and during 1999 we opened the remaining branch offices.

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, has
over 30 years of banking experience and was the President and Chief Executive
Officer 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 the position of Chairman and Chief Executive Officer of
the $2.4 billion SunTrust Bank, Gulf Coast, serving Manatee, Sarasota and
Charlotte Counties.

Mr. Klich was appointed to the Banks board of directors effective March 15,
2000, and became 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
serve as Chairman of the Companys board of directors and as Chairman of the
Banks board of directors, respectively.

During 2000, we focused our efforts on positioning ourselves for the future.
These strategic initiatives included, but were not limited to, the formation of
a new management team, the implementation of improved lending policies and a
continued effort to reduce costs and improve profitability; all geared towards
strengthening our balance sheet and adding value for our shareholders.

Sales and Closings of Branch Offices

On December 21, 2000, we announced that we had reached an agreement with CNB
National Bank (CNB) for the sale of two branch offices. These branches are
located in Lake City and Live Oak, Florida and had total deposits of $64.8
million at December 31, 2000. CNB has agreed to purchase the loans, premises
and other assets assigned to the two branches at their net book value and to
assume the deposit liabilities. In addition, on January 4, 2001, we announced
that we had reached an agreement with Pointe Bank (Pointe) for the sale of
branch offices in Miami-Dade County, Florida. The five offices had total
deposits of $57.6 million at December 31, 2000. Pointe has agreed to purchase
loans at par value, and fixtures and improvements and other assets assigned to
four of the branches at their book value and to assume deposit liabilities of
all five offices. These sales, which require regulatory approval, are
anticipated to close in the first half of 2001.

In February 2001, applications were filed with regulatory agencies to close two
branch offices, one in Pinellas County and one in Marion County. Regulatory
approval is pending.

2



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Subsequent Events

Branch Opening

On January 16, 2001, we announced the opening of a new full-service branch in
Sarasota, Florida. This office will offer personal banking, commercial and
real estate lending, private banking services, including safe deposit boxes,
and an automated teller machine.

Business of Republic Bancshares, Inc.

On January 23, 2001, we announced our business plan for 2001 and beyond which
includes these principal business strategies:



| |  | Concentration on and expansion of our core market                                                                                                                        
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Conservative and plain vanilla lending                                                                                                                               
| 
| |  | Diversification of the loan portfolio through the development of
commercial lending activities to small and medium sized businesses as well
as high net worth individuals
| 
| |  | Implementation of residential lending as the cornerstone of our retail banking efforts                                                                                   
| 
| |  | Reduction of nonperforming assets                                                                                                                                        

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

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 loan 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 Item 7. Managements Discussion and
Analysis of Financial Condition and Results of
Operations  Asset/ Liability
Management and Liquidity.

We offer a full range of deposit services, including checking and other
transaction accounts, savings accounts and time deposits. At December 31,
2000, we had no brokered deposits, and time deposits in amounts of $100,000 or
more constituted 11.97% 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, 2000 ($ in thousands):

|                                           |                                  |                         |      |               |      |   |         |         |           |                |            |       |        |  
|------------------------------------------ | -------------------------------- | ----------------------- | ---- | ------------- | ---- | - | ------- | ------- | --------- | -------------- | ---------- | ----- | ------ | -
|                                           |                                  |                         |      | Weighted      |     
|                                           |                                  |                         |      | Average       |      |   |         |         |           |                | Percent of |      
|                                           |                                  |                         |      | Interest Rate |      |   | Amount  |         |           | Total Deposits |           
|                                           |                                  |                         |      |               |      |   |         |         |           |                |           
|Noninterest bearing                        |                                  |                         | 0.00 | %             |      | $ | 133,950 |         |           |                | 6.21       | %    
|                                          
|                                          
|                                          
|                                          
|Interest checking                          |                                  |                         | 0.75 |               |      |   | 178,777 |         |           |                | 8.29       |      
|                                          
|                                          
|                                          
|                                          
|Savings deposits                           |                                  |                         | 3.37 |               |      |   | 199,875 |         |           |                | 9.26       |      
|                                          
|                                          
|                                          
|                                          
|Money market deposits                      |                                  |                         | 4.62 |               |      |   | 295,918 |         |           |                | 13.71      |      
|                                          
|                                          
|                                          
|                                          
|Time deposits with original maturities of:
|                                          
|                                          
|                                          
|                                          
|                                           | One year or less                 |                         |      | 5.23          |      |   |         | 905,914 |           |                |            | 41.98 |       
|                                          
|                                          
|                                          
|                                          
|                                           | Over one year through five years |                         |      | 6.25          |      |   |         | 443,383 |           |                |            | 20.55 |       
|                                           |                                  |                         |      |               |      |   |         |         |          
|                                           |                                  | Total time deposits (1) |      |               | 6.21 |   |         |         | 1,349,297 |                |            |       | 62.53  |  
|                                           |                                  |                         |      |               |      |   |         |         |          
|                                           |                                  | Total deposits          |      |               | 4.89 | % |         | $       | 2,157,817 |                |            |       | 100.00 | %
|                                           |                                  |                         |      |               |      |   |         |         |          



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|(1) |  | Includes time deposits in amounts of $100,000 or more of $258.3
million.
|--- |  | ------------------------------------------------------------------------

3



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At December 31, 2000, scheduled maturities of total time deposits were as
follows ($ in thousands):

|                    |  |        |           |  |                     |            |        |  
|------------------- |  | ------ | --------- |  | ------------------- | ---------- | ------ | -
|Year ended          |  |        |           |  |                     | Percent of |       
|December 31,        |  | Amount |           |  | Total Time Deposits |           
|                    |  |        |           |  |                     |           
|2001                |  | $      | 905,914   |  |                     |            | 67.14  | %
|                   
|                   
|                   
|                   
|2002                |  |        | 284,181   |  |                     |            | 21.06  |  
|                   
|                   
|                   
|                   
|2003                |  |        | 58,671    |  |                     |            | 4.35   |  
|                   
|                   
|                   
|                   
|2004                |  |        | 47,689    |  |                     |            | 3.53   |  
|                   
|                   
|                   
|                   
|2005                |  |        | 52,186    |  |                     |            | 3.87   |  
|                   
|                   
|                   
|                   
|Thereafter          |  |        | 656       |  |                     |            | 0.05   |  
|                    |  |        |           |  |                     |           
|Total time deposits |  | $      | 1,349,297 |  |                     |            | 100.00 | %
|                    |  |        |           |  |                     |           

Lending Activities

We originate a full range of traditional lending products for our portfolio.
Under our business plan for 2001 and beyond, development of our commercial
lending products to small and medium-sized businesses and high net worth
individuals will be more strongly emphasized. Commercial real estate lending
will continue to be an important line of business with this product line
focused on borrowers within our core markets.

For 2000, loan originations from all product types totaled $382.5 million. Of
this amount, originations of commercial real estate and commercial (business)
loans totaled $253.9 million, consumer loan originations (primarily home equity
loans) totaled $103.7 million and residential loan originations were $24.9
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):

|                                  |                           |                                   |                     |         |                 |           |           |         |           |           |           |         |           |           |           |         |           |           |         |         |         |           | 
|--------------------------------- | ------------------------- | --------------------------------- | ------------------- | ------- | --------------- | --------- | --------- | ------- | --------- | --------- | --------- | ------- | --------- | --------- | --------- | ------- | --------- | --------- | ------- | ------- | ------- | --------- | 
|                                  |                           |                                   |                     |         | At December 31, |          
|                                  |                           |                                   |                     |         |                 |          
|Based on total dollars:           |                           |                                   | 2000                |         |                 | 1999      |           |         | 1998      |           |           | 1997    |           |           | 1996      |        
|                                  |                           |                                   |                     |         |                 |           |           |         |           |           |           |         |           |           |           |        
|Real estate mortgage loans:      
|                                 
|                                 
|                                 
|                                 
|One-to-four family residential    |                           | $                                 | 641,557             |         |                 | $         | 720,184   |         |           | $         | 738,489   |         |           | $         | 686,661   |         |           | $         | 532,692 |        
|                                 
|                                 
|                                 
|                                 
|                                  | Multifamily residential   |                                   |                     | 85,338  |                 |           |           | 80,212  |           |           |           | 92,209  |           |           |           | 84,863  |           |           |         | 89,129  |        
|                                 
|                                 
|                                 
|                                 
|Nonconforming mortgages           |                           |                                   | 65,662              |         |                 |           | 79,562    |         |           |           | 72,980    |         |           |           |          |         |           |           |        |        
|                                 
|                                 
|                                 
|                                 
|                                  | Warehouse lines of credit |                                   |                     | 39,835  |                 |           |           | 96,873  |           |           |           | 132,973 |           |           |           |        |           |           |         |        |        
|                                 
|                                 
|                                 
|                                 
|                                  | High LTV loans            |                                   |                     | 37,894  |                 |           |           | 92,584  |           |           |           | 116,764 |           |           |           |        |           |           |         |        |        
|                                 
|                                 
|                                 
|                                 
|                                  | Commercial real estate    |                                   |                     | 439,431 |                 |           |           | 421,976 |           |           |           | 379,797 |           |           |           | 278,951 |           |           |         | 234,043 |        
|                                 
|                                 
|                                 
|                                 
|Construction/land development     |                           |                                   | 115,650             |         |                 |           | 165,649   |         |           |           | 130,415   |         |           |           | 51,511    |         |           |           | 32,245  |        
|                                 
|                                 
|                                 
|                                 
|                                  | Home equity loans         |                                   |                     | 137,845 |                 |           |           | 118,737 |           |           |           | 104,803 |           |           |           | 47,365  |           |           |         | 15,014  |        
|                                  |                           |                                   |                     |         |                 |           |           |         |           |           |           |         |           |           |          
|Total real estate mortgage loans  |                           |                                   | 1,563,212           |         |                 |           | 1,775,777 |         |           |           | 1,768,430 |         |           |           | 1,149,351 |         |           |           | 903,123 |        
|                                 
|                                 
|                                 
|                                 
|Commercial (business) loans       |                           |                                   | 124,699             |         |                 |           | 90,378    |         |           |           | 84,002    |         |           |           | 39,119    |         |           |           | 40,747  |        
|                                 
|                                 
|                                 
|                                 
|Consumer loans and other loans    |                           |                                   | 23,431              |         |                 |           | 23,737    |         |           |           | 43,857    |         |           |           | 27,430    |         |           |           | 32,352  |        
|                                  |                           |                                   |                     |         |                 |           |           |         |           |           |           |         |           |           |          
|Total portfolio loans             |                           |                                   | 1,711,342           |         |                 |           | 1,889,892 |         |           |           | 1,896,289 |         |           |           | 1,215,900 |         |           |           | 976,222 |        
|                                 
|                                 
|                                 
|                                 
|Allowance for loan losses         |                           |                                   | (33,462             | )       |                 |           | (28,177   | )       |           |           | (28,077   | )       |           |           | (22,023   | )       |           |           | (19,774 | )      
|                                  |                           |                                   |                     |         |                 |           |           |         |           |           |           |         |           |           |          
|                                  |                           | Portfolio loans, net of allowance |                     |         | 1,677,880       |           |           |         | 1,861,715 |           |           |         | 1,868,212 |           |           |         | 1,193,877 |           |         |         | 956,448 |          
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|Loans held for sale:             
|                                 
|                                 
|                                 
|                                 
|Residential first mortgage loans- |                           |                                   |                    |         |                 |           |          |         |           |           | 184,176   |         |           |           | 141,556   |         |           |           | 92,838  |        
|                                 
|                                 
|                                 
|                                 
|High LTV loans                    |                           |                                   |                    |         |                 |           |          |         |           |           |          |         |           |           | 45,670    |         |           |           | 5,511   |        
|                                  |                           |                                   |                     |         |                 |           |           |         |           |           |           |         |           |           |          
|                                  |                           |                                   | Loans held for sale |         |                 |          |           |         |           |          |           |         |           | 184,176   |           |         |           | 187,226   |         |         |         | 98,349    | 
|                                  |                           |                                   |                     |         |                 |           |           |         |           |           |           |         |           |           |          
|                                  |                           |                                   | Total loans         |         | $               | 1,677,880 |           |         | $         | 1,861,715 |           |         | $         | 2,052,388 |           |         | $         | 1,381,103 |         |         | $       | 1,054,797 | 
|                                  |                           |                                   |                     |         |                 |           |           |         |           |           |           |         |           |           |          

4



---



|                                 |                       |  |              |        |   |      |       |        |      |  |       |        |   |  |       |        |   |  |       |        |  
|-------------------------------- | --------------------- |  | ------------ | ------ | - | ---- | ----- | ------ | ---- |  | ----- | ------ | - |  | ----- | ------ | - |  | ----- | ------ | -
|                                 |                       |  | December 31, |       
|                                 |                       |  |              |       
|Based on percent of portfolio:   |                       |  | 2000         |        |   | 1999 |       |        | 1998 |  |       | 1997   |   |  | 1996  |       
|                                 |                       |  |              |        |   |      |       |        |      |  |       |        |   |  |       |       
|Real estate mortgage loans:     
|                                
|                                
|                                
|                                
|One-to-four family residential   |                       |  | 37.49        | %      |   |      | 38.11 | %      |      |  | 38.94 | %      |   |  | 56.47 | %      |   |  | 54.57 | %     
|                                
|                                
|                                
|                                
|Multifamily residential          |                       |  | 4.99         |        |   |      | 4.24  |        |      |  | 4.86  |        |   |  | 6.98  |        |   |  | 9.13  |       
|                                
|                                
|                                
|                                
|Nonconforming mortgages          |                       |  | 3.84         |        |   |      | 4.21  |        |      |  | 3.85  |        |   |  |      |        |   |  |      |       
|                                
|                                
|                                
|                                
|Warehouse lines of credit        |                       |  | 2.33         |        |   |      | 5.13  |        |      |  | 7.01  |        |   |  |      |        |   |  |      |       
|                                
|                                
|                                
|                                
|High LTV loans                   |                       |  | 2.21         |        |   |      | 4.90  |        |      |  | 6.16  |        |   |  |      |        |   |  |      |       
|                                
|                                
|                                
|                                
|Commercial real estate           |                       |  | 25.67        |        |   |      | 22.33 |        |      |  | 20.03 |        |   |  | 22.94 |        |   |  | 23.97 |       
|                                
|                                
|                                
|                                
|Construction/land development    |                       |  | 6.76         |        |   |      | 8.76  |        |      |  | 6.88  |        |   |  | 4.24  |        |   |  | 3.30  |       
|                                
|                                
|                                
|                                
|Home equity loans                |                       |  | 8.05         |        |   |      | 6.28  |        |      |  | 5.53  |        |   |  | 3.90  |        |   |  | 1.54  |       
|                                 |                       |  |              |        |   |      |       |        |      |  |       |        |   |  |      
|Total real estate mortgage loans |                       |  | 91.34        |        |   |      | 93.96 |        |      |  | 93.26 |        |   |  | 94.53 |        |   |  | 92.51 |       
|                                
|                                
|                                
|                                
|Commercial (business) loans      |                       |  | 7.29         |        |   |      | 4.78  |        |      |  | 4.43  |        |   |  | 3.22  |        |   |  | 4.17  |       
|                                
|                                
|                                
|                                
|Consumer loans and other loans   |                       |  | 1.37         |        |   |      | 1.26  |        |      |  | 2.31  |        |   |  | 2.25  |        |   |  | 3.32  |       
|                                 |                       |  |              |        |   |      |       |        |      |  |       |        |   |  |      
|                                 | Total portfolio loans |  |              | 100.00 | % |      |       | 100.00 | %    |  |       | 100.00 | % |  |       | 100.00 | % |  |       | 100.00 | %
|                                 |                       |  |              |        |   |      |       |        |      |  |       |        |   |  |      

The following table shows the maturities of our real estate secured loans at
December 31, 2000 and 1999. 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):

|                                                   |                              |   |                   |         |  |                   |         |        |             |   |           |            |  |   |        |        | 
|-------------------------------------------------- | ---------------------------- | - | ----------------- | ------- |  | ----------------- | ------- | ------ | ----------- | - | --------- | ---------- |  | - | ------ | ------ | 
|                                                   |                              |   | December 31, 2000 |         |  | December 31, 1999 |        
|                                                   |                              |   |                   |         |  |                   |        
|Type of loan:                                      |                              |   | Real Estate       |         |  | Commercial        |         |        | Real Estate |   |           | Commercial | 
|                                                   |                              |   |                   |         |  |                   |         |        |             |   |           |            | 
|Amounts due:                                      
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | One year or less             |   | $                 | 353,830 |  |                   | $       | 56,153 |             |   | $         | 393,953    |  |   | $      | 40,651 | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | After one through five years |   |                   | 225,927 |  |                   |         | 51,378 |             |   |           | 339,331    |  |   |        | 33,167 | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | More than five years         |   |                   | 983,455 |  |                   |         | 17,168 |             |   |           | 1,042,493  |  |   |        | 16,560 | 
|                                                   |                              |   |                   |         |  |                   |         |        |             |   |           |           
|Total                                              |                              | $ | 1,563,212         |         |  | $                 | 124,699 |        |             | $ | 1,775,777 |            |  | $ | 90,378 |       
|                                                   |                              |   |                   |         |  |                   |         |        |             |   |           |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|Interest rate terms on
amounts due after one year:
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Adjustable                   |   | $                 | 594,261 |  |                   | $       | 43,871 |             |   | $         | 668,549    |  |   | $      | 27,804 | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Fixed                        |   |                   | 615,121 |  |                   |         | 24,675 |             |   |           | 713,275    |  |   |        | 21,923 | 
|                                                   |                              |   |                   |         |  |                   |         |        |             |   |           |           
|Total                                              |                              | $ | 1,209,382         |         |  | $                 | 68,546  |        |             | $ | 1,381,824 |            |  | $ | 49,727 |       
|                                                   |                              |   |                   |         |  |                   |         |        |             |   |           |           

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 $5.0 million require the
approval of the board of directors Loan Committee or a majority of the full
board prior to funding. Loan purchases, when applicable, 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. 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

5



---



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%). 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 our
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 small and
medium-sized businesses and high net worth individuals with satisfactory cash
flows.

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 Item 1. Business -
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 our
historical data 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 as 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, 2000, $389,000 of the loan loss allowance resulted from
allocations of loan discount with the $20.3 million remainder resulting from
provisions to the allowance. At December 31, 2000, the amount of unearned
discount on purchased loans, which had not been allocated to the allowance,
totaled $3.3 million.

Loan loss allowance activity during 2000 included $15.0 million of loan
charge-offs (net of recoveries), $389,000 reallocated from the allowance to
loan discounts and a $20.7 million provision for loan losses. Activity during
1999 included a $9.9 million provision for loan losses, loan charge-offs (net
of recoveries) of $9.6 million and $195,000 reallocated from the allowance to
loan discounts.

6



---



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

|                                                           |                                                       |   |                          |      |   |      |         |      |      |   |        |        |   |   |        |    |  |   |        |        |  
|---------------------------------------------------------- | ----------------------------------------------------- | - | ------------------------ | ---- | - | ---- | ------- | ---- | ---- | - | ------ | ------ | - | - | ------ | -- |  | - | ------ | ------ | -
|                                                           |                                                       |   | Years Ended December 31, |     
|                                                           |                                                       |   |                          |     
|                                                           |                                                       |   | 2000                     |      |   | 1999 |         |      | 1998 |   |        | 1997   |   |   | 1996   |   
|                                                           |                                                       |   |                          |      |   |      |         |      |      |   |        |        |   |   |        |   
|Allowance at beginning
of period                           |                                                       | $ | 28,177                   |      |   | $    | 28,077  |      |      | $ | 22,023 |        |   | $ | 19,774 |    |  | $ | 21,097 |       
|                                                          
|                                                          
|                                                          
|                                                          
|Allowance from Firstate
Acquisition                        |                                                       |   |                         |      |   |      |        |      |      |   |       |        |   |   | 132    |    |  |   |       |       
|                                                          
|                                                          
|                                                          
|                                                          
|Loan discount (net) allocated
to/(from) the allowance for:
|                                                          
|                                                          
|                                                          
|                                                          
|Loans purchased from Crossland                             |                                                       |   | (12                      | )    |   |      | (55     | )    |      |   | (805   | )      |   |   |       |    |  |   |       |       
|                                                          
|                                                          
|                                                          
|                                                          
|Loans purchased in 1994                                    |                                                       |   | (256                     | )    |   |      |        |      |      |   | (689   | )      |   |   |       |    |  |   | (202   | )     
|                                                          
|                                                          
|                                                          
|                                                          
|Loans purchased in 1995                                    |                                                       |   | (87                      | )    |   |      | (215    | )    |      |   | (2,605 | )      |   |   | (773   | )  |  |   | (1,541 | )     
|                                                          
|                                                          
|                                                          
|                                                          
|Loans purchased in 1996                                    |                                                       |   | (11                      | )    |   |      |        |      |      |   |       |        |   |   |       |    |  |   | 11     |       
|                                                          
|                                                          
|                                                          
|                                                          
|Loans purchased in 1997                                    |                                                       |   | (23                      | )    |   |      | 75      |      |      |   | (204   | )      |   |   | 812    |    |  |   |       |       
|                                                           |                                                       |   |                          |      |   |      |         |      |      |   |        |        |   |   |       
|                                                           | Total loan discount allocated
to/(from) the allowance |   |                          | (389 | ) |      |         | (195 | )    |   |        | (4,303 | ) |   |        | 39 |  |   |        | (1,732 | )
|                                                          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                          
|Charge-offs:                                              
|                                                          
|                                                          
|                                                          
|                                                          
|Residential first lien                                     |                                                       |   | (2,790                   | )    |   |      | (2,980  | )    |      |   | (1,481 | )      |   |   | (974   | )  |  |   | (1,934 | )     
|                                                          
|                                                          
|                                                          
|                                                          
|Warehouse lines of credit                                  |                                                       |   | (5,077                   | )    |   |      |        |      |      |   |       |        |   |   |       |   
|                                                          
|                                                          
|                                                          
|                                                          
|Commercial real estate/
multi-family                       |                                                       |   | (776                     | )    |   |      | (838    | )    |      |   | (266   | )      |   |   | (15    | )  |  |   | (170   | )     
|                                                          
|                                                          
|                                                          
|                                                          
|Commercial (business)                                      |                                                       |   | (68                      | )    |   |      | (353    | )    |      |   | (1,450 | )      |   |   | (125   | )  |  |   | (249   | )     
|                                                          
|                                                          
|                                                          
|                                                          
|High LTV                                                   |                                                       |   | (6,413                   | )    |   |      | (5,357  | )    |      |   |       |        |   |   |       |    |  |   |       |       
|                                                          
|                                                          
|                                                          
|                                                          
|Home equity                                                |                                                       |   | (1,213                   | )    |   |      | (730    | )    |      |   |       |        |   |   |       |    |  |   |       |       
|                                                          
|                                                          
|                                                          
|                                                          
|Consumer and other loans                                   |                                                       |   | (469                     | )    |   |      | (865    | )    |      |   | (1,197 | )      |   |   | (288   | )  |  |   | (292   | )     
|                                                           |                                                       |   |                          |      |   |      |         |      |      |   |        |        |   |   |       
|Total charge-offs                                          |                                                       |   | (16,806                  | )    |   |      | (11,123 | )    |      |   | (4,394 | )      |   |   | (1,402 | )  |  |   | (2,645 | )     
|                                                          
|                                                          
|                                                          
|                                                          
|Recoveries:                                               
|                                                          
|                                                          
|                                                          
|                                                          
|Residential first lien                                     |                                                       |   | 260                      |      |   |      | 695     |      |      |   | 112    |        |   |   | 3      |    |  |   | 31     |       
|                                                          
|                                                          
|                                                          
|                                                          
|Warehouse lines of credit                                  |                                                       |   | 51                       |      |   |      |        |      |      |   |       |        |   |   |       |    |  |   |       |       
|                                                          
|                                                          
|                                                          
|                                                          
|Commercial real estate/
multi-family                       |                                                       |   | 481                      |      |   |      | 18      |      |      |   | 183    |        |   |   | 54     |    |  |   | 35     |       
|                                                          
|                                                          
|                                                          
|                                                          
|Commercial loans (business)                                |                                                       |   | 63                       |      |   |      | 184     |      |      |   | 48     |        |   |   | 152    |    |  |   | 168    |       
|                                                          
|                                                          
|                                                          
|                                                          
|High LTV                                                   |                                                       |   | 764                      |      |   |      | 301     |      |      |   |       |        |   |   |       |    |  |   |       |       
|                                                          
|                                                          
|                                                          
|                                                          
|Home equity                                                |                                                       |   | 61                       |      |   |      | 52      |      |      |   |       |        |   |   |       |    |  |   |       |       
|                                                          
|                                                          
|                                                          
|                                                          
|Consumer and other loans                                   |                                                       |   | 100                      |      |   |      | 245     |      |      |   | 147    |        |   |   | 24     |    |  |   | 62     |       
|                                                           |                                                       |   |                          |      |   |      |         |      |      |   |        |        |   |   |       
|Total recoveries                                           |                                                       |   | 1,780                    |      |   |      | 1,495   |      |      |   | 490    |        |   |   | 233    |    |  |   | 296    |       
|                                                          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                          
|Net charge-offs                                            |                                                       |   | (15,026                  | )    |   |      | (9,628  | )    |      |   | (3,904 | )      |   |   | (1,169 | )  |  |   | (2,349 | )     
|                                                          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                          
|Provisions for loan losses                                 |                                                       |   | 20,700                   |      |   |      | 9,923   |      |      |   | 14,261 |        |   |   | 3,247  |    |  |   | 2,758  |       
|                                                           |                                                       |   |                          |      |   |      |         |      |      |   |        |        |   |   |       
|Allowance at end of period                                 |                                                       | $ | 33,462                   |      |   | $    | 28,177  |      |      | $ | 28,077 |        |   | $ | 22,023 |    |  | $ | 19,774 |       
|                                                           |                                                       |   |                          |      |   |      |         |      |      |   |        |        |   |   |       
|                                                          
|                                                          
|                                                          
|                                                          
|                                                          
|Charges to allocated loan discount                         |                                                       |   | 0.01                     | %    |   |      | 0.05    | %    |      |   | 0.03   | %      |   |   | 0.04   | %  |  |   | 0.15   | %     
|                                                          
|                                                          
|                                                          
|                                                          
|Other net charge-offs                                      |                                                       |   | 0.81                     |      |   |      | 0.45    |      |      |   | 0.19   |        |   |   | 0.06   |    |  |   | 0.10   |       
|                                                           |                                                       |   |                          |      |   |      |         |      |      |   |        |        |   |   |       
|Total net charge-offs to
average loans                     |                                                       |   | 0.82                     | %    |   |      | 0.50    | %    |      |   | 0.22   | %      |   |   | 0.10   | %  |  |   | 0.25   | %     
|                                                           |                                                       |   |                          |      |   |      |         |      |      |   |        |        |   |   |       

7



---



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 ($ in
thousands):

|                                    |                       |          |        |       |        |           |      |            |        |   |       |           |        |  |            |      |       |  
|----------------------------------- | --------------------- | -------- | ------ | ----- | ------ | --------- | ---- | ---------- | ------ | - | ----- | --------- | ------ |  | ---------- | ---- | ----- | -
|                                    |                       |          |        | 2000  |        |           | 1999 |           
|                                    |                       |          |        |       |        |           |      |           
|                                    |                       |          |        |       |        |           |      | Percent of |        |   |       |           |        |  | Percent of |     
|Allowance Allocation                |                       |          | Amount |       |        | Portfolio |      |            | Amount |   |       | Portfolio |       
|                                    |                       |          |        |       |        |           |      |            |        |   |       |           |       
|Performing/not classified:         
|                                   
|                                   
|                                   
|                                   
|Residential loans:                 
|                                   
|                                   
|                                   
|                                   
|                                    | March 1995 purchase   |          | $      | 648   |        |           |      | 1.2        | %      |   | $     | 44        |        |  |            | 1.2  | %    
|                                   
|                                   
|                                   
|                                   
|                                    | All other residential |          |        | 1,461 |        |           |      | 35.4       |        |   |       | 1,884     |        |  |            | 56.6 |      
|                                   
|                                   
|                                   
|                                   
|Debt consolidation & subprime loans |                       |          | 6,124  |       |        |           | 6.0  |            |        |   | 5,681 |           |        |  | 7.3        |     
|                                   
|                                   
|                                   
|                                   
|Warehouse lines of credit           |                       |          | 368    |       |        |           | 2.2  |            |        |   |      |           |        |  |           |     
|                                   
|                                   
|                                   
|                                   
|Commercial (business)               |                       |          | 1,205  |       |        |           | 7.0  |            |        |   | 877   |           |        |  | 4.0        |     
|                                   
|                                   
|                                   
|                                   
|Commercial real estate              |                       |          | 4,924  |       |        |           | 32.0 |            |        |   | 5,504 |           |        |  | 19.2       |     
|                                   
|                                   
|                                   
|                                   
|Consumer & other                    |                       |          | 1,950  |       |        |           | 9.3  |            |        |   | 1,737 |           |        |  | 7.9        |     
|                                    |                       |          |        |       |        |           |      |            |        |   |       |           |       
|                                    |                       | Subtotal |        |       | 16,680 |           |      |            | 93.1   |   |       |           | 15,727 |  |            |      | 96.2  |  
|                                   
|                                   
|                                   
|                                   
|                                   
|                                   
|                                   
|                                   
|                                   
|Nonperforming/classified:          
|                                   
|                                   
|                                   
|                                   
|Special mention                     |                       |          | 1,040  |       |        |           | 3.0  |            |        |   | 1,001 |           |        |  | 1.4        |     
|                                   
|                                   
|                                   
|                                   
|Substandard & nonperforming         |                       |          | 8,668  |       |        |           | 3.5  |            |        |   | 5,096 |           |        |  | 2.3        |     
|                                   
|                                   
|                                   
|                                   
|Doubtful                            |                       |          | 3,013  |       |        |           | 0.4  |            |        |   | 1,427 |           |        |  | 0.1        |     
|                                   
|                                   
|                                   
|                                   
|Loss                                |                       |          |       |       |        |           |     |            |        |   |      |           |        |  |           |     
|                                    |                       |          |        |       |        |           |      |            |        |   |       |           |       
|                                    |                       | Subtotal |        |       | 12,721 |           |      |            | 6.9    |   |       |           | 7,524  |  |            |      | 3.8   |  
|                                   
|                                   
|                                   
|                                   
|Unfunded portion of closed loans    |                       |          | 919    |       |        |           |     |            |        |   | 1,356 |           |        |  |           |     
|                                   
|                                   
|                                   
|                                   
|Unallocated                         |                       |          | 3,142  |       |        |           |     |            |        |   | 3,570 |           |        |  |           |     
|                                    |                       |          |        |       |        |           |      |            |        |   |       |           |       
|                                    |                       | Total    |        | $     | 33,462 |           |      |            | 100.00 | % |       | $         | 28,177 |  |            |      | 100.0 | %
|                                    |                       |          |        |       |        |           |      |            |        |   |       |           |       

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 $49.4 million at December 31, 2000,
compared with $25.0 million at December 31, 1999, an increase of $24.4 million.
During the third quarter of 2000, we placed into nonperforming status a $15.3
million hotel construction loan in Wilmington, Delaware and a $13.1 million
residential development project in Naples, Florida. At December 31, 2000,
these two large commercial real estate loans comprised 56% of total
nonperforming loans. At December 31, 2000 and 1999, we had nonperforming
assets (including loans classified as non-accrual) of
$57.0 million or 2.33% of total assets and

8



---



$31.2 million or 1.22% of total assets, respectively. Accruing
loans, which were 90 days past due amounted to $1.2 million at December 31,
2000 and
$171,000 at December 31, 1999, and primarily consisted of loans in process of
renewal. (See Item 7. Managements Discussion and Analysis of Financial
Condition and Results of Operations  Comparison of Balance Sheets at December
31, 2000 and 1999).

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

|                                     |  |                 |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|------------------------------------ |  | --------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | - |  | ---- | ------ | - |  | - | ------ | -
|                                     |  | At December 31, |       
|                                     |  |                 |       
|                                     |  | 2000            |        |   | 1999 |   |        | 1998 |  |   | 1997   |   |  | 1996 |       
|                                     |  |                 |        |   |      |   |        |      |  |   |        |   |  |      |       
|Non-accrual loans:                  
|                                    
|                                    
|                                    
|                                    
|One-to-four family residential       |  | $               | 9,808  |   |      | $ | 13,642 |      |  | $ | 19,579 |   |  | $    | 17,101 |   |  | $ | 12,495 |  
|                                    
|                                    
|                                    
|                                    
|Multifamily residential              |  |                 |       |   |      |   |       |      |  |   | 183    |   |  |      | 194    |   |  |   | 55     |  
|                                    
|                                    
|                                    
|                                    
|Nonconforming mortgages              |  |                 | 3,485  |   |      |   | 4,973  |      |  |   | 3,369  |   |  |      |       |   |  |   |       |  
|                                    
|                                    
|                                    
|                                    
|Warehouse lines of credit            |  |                 | 3,029  |   |      |   | 868    |      |  |   |       |   |  |      |       |   |  |   |       |  
|                                    
|                                    
|                                    
|                                    
|High LTV loans                       |  |                 | 477    |   |      |   | 474    |      |  |   |       |   |  |      |       |   |  |   |       |  
|                                    
|                                    
|                                    
|                                    
|Commercial real estate               |  |                 | 30,181 |   |      |   | 3,252  |      |  |   | 9,888  |   |  |      | 9,121  |   |  |   | 8,140  |  
|                                    
|                                    
|                                    
|                                    
|Commercial (business)                |  |                 | 736    |   |      |   | 797    |      |  |   | 1,312  |   |  |      | 2,031  |   |  |   | 1,604  |  
|                                    
|                                    
|                                    
|                                    
|Home equity and consumer             |  |                 | 1,680  |   |      |   | 973    |      |  |   | 1,261  |   |  |      | 638    |   |  |   | 164    |  
|                                     |  |                 |        |   |      |   |        |      |  |   |        |   |  |      |       
|Total non-accrual loans              |  |                 | 49,396 |   |      |   | 24,979 |      |  |   | 35,592 |   |  |      | 29,085 |   |  |   | 22,458 |  
|                                    
|                                    
|                                    
|                                    
|Other nonperforming receivables      |  |                 | 639    |   |      |   | 736    |      |  |   | 1,010  |   |  |      | 1,319  |   |  |   |       |  
|                                    
|                                    
|                                    
|                                    
|ORE acquired through foreclosure     |  |                 | 5,729  |   |      |   | 5,332  |      |  |   | 4,951  |   |  |      | 8,191  |   |  |   | 9,477  |  
|                                    
|                                    
|                                    
|                                    
|Accruing loans 90 days
past due      |  |                 | 1,209  |   |      |   | 171    |      |  |   | 1,232  |   |  |      | 196    |   |  |   | 113    |  
|                                     |  |                 |        |   |      |   |        |      |  |   |        |   |  |      |       
|Nonperforming assets                 |  | $               | 56,973 |   |      | $ | 31,218 |      |  | $ | 42,785 |   |  | $    | 38,791 |   |  | $ | 32,048 |  
|                                     |  |                 |        |   |      |   |        |      |  |   |        |   |  |      |       
|                                    
|                                    
|                                    
|                                    
|                                    
|Nonperforming loans to loans         |  |                 | 2.96   | % |      |   | 1.33   | %    |  |   | 1.94   | % |  |      | 2.41   | % |  |   | 2.31   | %
|                                    
|                                    
|                                    
|                                    
|                                    
|                                    
|                                    
|                                    
|                                    
|Nonperforming assets to total assets |  |                 | 2.33   | % |      |   | 1.22   | %    |  |   | 1.71   | % |  |      | 2.31   | % |  |   | 2.35   | %

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):

|                                      |  |                 |       |      |  |      |       |      |  |      |       |   |  |   |       |   |  |   |       |  
|------------------------------------- |  | --------------- | ----- | ---- |  | ---- | ----- | ---- |  | ---- | ----- | - |  | - | ----- | - |  | - | ----- | -
|                                      |  | At December 31,
|                                      |  |                
|                                      |  | 2000            |       | 1999 |  | 1998 |       | 1997 |  | 1996
|                                      |  |                 |       |      |  |      |       |      |  |     
|Residential houses                    |  | $               | 2,559 |      |  | $    | 3,245 |      |  | $    | 2,258 |   |  | $ | 2,613 |   |  | $ | 3,600 |  
|                                     
|                                     
|                                     
|                                     
|Vacant undeveloped residential land   |  |                 |      |      |  |      |      |      |  |      | 6     |   |  |   | 1,145 |   |  |   | 1,334 |  
|                                     
|                                     
|                                     
|                                     
|Vacant developed residential lots     |  |                 |      |      |  |      | 192   |      |  |      | 785   |   |  |   | 254   |   |  |   | 260   |  
|                                     
|                                     
|                                     
|                                     
|Vacant commercial undeveloped land    |  |                 |      |      |  |      | 256   |      |  |      | 640   |   |  |   | 855   |   |  |   | 821   |  
|                                     
|                                     
|                                     
|                                     
|Commercial land developed for sale    |  |                 | 243   |      |  |      |      |      |  |      | 890   |   |  |   | 2,835 |   |  |   | 3,450 |  
|                                     
|                                     
|                                     
|                                     
|Income-producing commercial buildings |  |                 | 1,522 |      |  |      | 1,190 |      |  |      | 310   |   |  |   | 427   |   |  |   | 12    |  
|                                     
|                                     
|                                     
|                                     
|Vacant commercial buildings           |  |                 | 1,405 |      |  |      | 449   |      |  |      | 62    |   |  |   | 62    |   |  |   |      |  
|                                      |  |                 |       |      |  |      |       |      |  |      |       |   |  |   |       |   |  |   |       |  
|Total ORE                             |  | $               | 5,729 |      |  | $    | 5,332 |      |  | $    | 4,951 |   |  | $ | 8,191 |   |  | $ | 9,477 |  
|                                      |  |                 |       |      |  |      |       |      |  |      |       |   |  |   |       |   |  |   |       |  
|ORE to total assets                   |  |                 | 0.23  | %    |  |      | 0.21  | %    |  |      | 0.20  | % |  |   | 0.49  | % |  |   | 0.69  | %
|                                      |  |                 |       |      |  |      |       |      |  |      |       |   |  |   |       |   |  |   |       |  

9



---



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, 2000 and 1999, the loan portfolio included TDRs amounting to $1.5
million and $1.2 million, respectively. All restructured loans, as of December
31, 2000 and 1999, were performing loans.

Investment Activities

The investment portfolio serves a primary role in our balance sheet management.
The decision to purchase or sell securities is based upon the current
assessment of economic and financial conditions, including the interest rate
environment and liquidity requirements. Florida statutes require that a
specified minimum amount of liquid assets be maintained based primarily on the
level of deposits. At December 31, 2000 and throughout the year, the amount of
liquid assets maintained exceeded the regulatory minimum.

Employees

At December 31, 2000, we had 995 full-time equivalent employees, none of whom
were represented by a union or other collective bargaining agreement.

Market Area

As of December 31, 2000, we operated 80 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 located in the Tampa-St. Petersburg-Clearwater MSA, which
includes Hillsborough, Hernando, Pasco, and Pinellas Counties. As of July
1999, the latest date estimates were available, the Tampa-St. Petersburg MSA
had a population of 2.3 million, which would rank approximately 21st in the
United States. Light industry and service businesses and a large and growing
segment of retirees support the economic base of the MSAs in which we have
branches. Further support comes from 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 and through
alternative delivery channels such as the World Wide Web.

We ranked 11th among holding companies and 17th among all depository
institutions in the state of Florida in terms of deposits held as of September
30, 2000, the latest date for which data is available. As the following table
indicates, market share ranges from 10.53% in Suwannee County to .07% in Lee
County. When our pending branch sales are completed, we will no longer operate
branch offices in Miami-Dade, Columbia and Suwannee Counties.

10



---



Branch Deposits in Florida by County

($ in thousands)

|             |       |  |                      |    |                          |   |           |           |         |   |         |           |  |   |            |             |  |  |       |      |  
|------------ | ----- |  | -------------------- | -- | ------------------------ | - | --------- | --------- | ------- | - | ------- | --------- |  | - | ---------- | ----------- |  |  | ----- | ---- | -
|             |       |  | At December 31, 2000 |    | As of September 30, 2000
|             |       |  |                      |    |                         
|             |       |  | Number of            |    | Amount                   |   | Amount    |           | Florida |   | Market 
|             |       |  | Branch Offices       |    | By Branch                |   | By Branch |           | Total   |   | Share  
|             |       |  |                      |    |                          |   |           |           |         |   |        
|Brevard      |       |  | 5                    |    |                          | $ | 163,512   |           |         | $ | 166,497 |           |  | $ | 4,294,112  |             |  |  | 3.88  | %   
|            
|            
|            
|            
|Broward      |       |  | 9                    |    |                          |   | 275,404   |           |         |   | 269,331 |           |  |   | 22,207,733 |             |  |  | 1.21  |     
|            
|            
|            
|            
|Collier      |       |  | 1                    |    |                          |   | 8,586     |           |         |   | 9,073   |           |  |   | 4,446,168  |             |  |  | 0.20  |     
|            
|            
|            
|            
|Columbia     |       |  | 1                    |    |                          |   | 33,834    |           |         |   | 33,871  |           |  |   | 402,303    |             |  |  | 8.42  |     
|            
|            
|            
|            
|Miami-Dade   |       |  | 5                    |    |                          |   | 57,644    |           |         |   | 55,427  |           |  |   | 38,913,181 |             |  |  | 0.14  |     
|            
|            
|            
|            
|Hernando     |       |  | 1                    |    |                          |   | 23,877    |           |         |   | 24,103  |           |  |   | 1,850,755  |             |  |  | 1.30  |     
|            
|            
|            
|            
|Hillsborough |       |  | 2                    |    |                          |   | 9,569     |           |         |   | 10,168  |           |  |   | 9,519,520  |             |  |  | 0.11  |     
|            
|            
|            
|            
|Lee          |       |  | 1                    |    |                          |   | 4,291     |           |         |   | 4,044   |           |  |   | 5,349,744  |             |  |  | 0.07  |     
|            
|            
|            
|            
|Manatee      |       |  | 7                    |    |                          |   | 187,100   |           |         |   | 191,656 |           |  |   | 3,034,272  |             |  |  | 6.32  |     
|            
|            
|            
|            
|Marion       |       |  | 4                    |    |                          |   | 68,195    |           |         |   | 67,611  |           |  |   | 2,625,149  |             |  |  | 2.58  |     
|            
|            
|            
|            
|Monroe       |       |  | 3                    |    |                          |   | 79,101    |           |         |   | 81,742  |           |  |   | 1,346,580  |             |  |  | 6.07  |     
|            
|            
|            
|            
|Orange       |       |  | 3                    |    |                          |   | 60,760    |           |         |   | 66,878  |           |  |   | 9,041,320  |             |  |  | 0.74  |     
|            
|            
|            
|            
|Osceola      |       |  | 5                    |    |                          |   | 120,810   |           |         |   | 122,933 |           |  |   | 1,191,714  |             |  |  | 10.32 |     
|            
|            
|            
|            
|Palm Beach   |       |  | 3                    |    |                          |   | 55,139    |           |         |   | 49,438  |           |  |   | 20,547,964 |             |  |  | 0.24  |     
|            
|            
|            
|            
|Pasco        |       |  | 3                    |    |                          |   | 77,217    |           |         |   | 78,765  |           |  |   | 4,071,184  |             |  |  | 1.93  |     
|            
|            
|            
|            
|Pinellas     |       |  | 22                   |    |                          |   | 774,152   |           |         |   | 790,408 |           |  |   | 13,296,319 |             |  |  | 5.94  |     
|            
|            
|            
|            
|Sarasota     |       |  | 2                    |    |                          |   | 77,714    |           |         |   | 78,033  |           |  |   | 6,786,802  |             |  |  | 1.15  |     
|            
|            
|            
|            
|Seminole     |       |  | 1                    |    |                          |   | 32,439    |           |         |   | 34,045  |           |  |   | 3,045,728  |             |  |  | 1.12  |     
|            
|            
|            
|            
|Suwannee     |       |  | 1                    |    |                          |   | 30,958    |           |         |   | 30,800  |           |  |   | 292,526    |             |  |  | 10.53 |     
|            
|            
|            
|            
|Volusia      |       |  | 1                    |    |                          |   | 17,515    |           |         |   | 17,459  |           |  |   | 6,009,738  |             |  |  | 0.29  |     
|             |       |  |                      |    |                          |   |           |           |         |   |         |           |  |   |            |             |  |  |       |     
|            
|            
|            
|            
|            
|             | Total |  |                      | 80 |                          |   | $         | 2,157,817 |         |   | $       | 2,182,282 |  |   | $          | 158,272,812 |  |  |       | 1.38 | %
|             |       |  |                      |    |                          |   |           |           |         |   |         |           |  |   |            |             |  |  |       |     

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 Banks 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: (1) a subordinate tranche from a 1998 securitization of
High LTV Loans; (2) the resulting residual interest in cash flows from the 1998
securitization and from a securitization completed in 1997; and (3) 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 (loss) on securities, net. Securities held to maturity
are carried at amortized cost.

11



---



For a description of the key assumptions used by us to measure market risk, see
the discussion on interest sensitivity analysis under the caption Item 7.
Managements Discussion and Analysis of Financial Condition and Results of
Operations 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, 2000 ($ in thousands).

|                                            |  |      |           |   |      |   |         |      |  |   |         |   |  |      |         |   |            |   |         |       |  |   |         |   |  |   |           |  
|------------------------------------------- |  | ---- | --------- | - | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - | ---------- | - | ------- | ----- |  | - | ------- | - |  | - | --------- | -
|                                            |  | 2001 |           |   | 2002 |   |         | 2003 |  |   | 2004    |   |  | 2005 |         |   | Thereafter |   |         | Total | 
|                                            |  |      |           |   |      |   |         |      |  |   |         |   |  |      |         |   |            |   |         |       | 
|Assets                                     
|                                           
|                                           
|                                           
|                                           
|Interest bearing
deposits in banks          |  | $    | 6,910     |   |      | $ |        |      |  | $ |        |   |  | $    |        |   |            | $ |        |       |  | $ |        |   |  | $ | 6,910     |  
|                                           
|                                           
|                                           
|                                           
|                                            |  |      | 6.37      | % |      |   |        |      |  |   |        |   |  |      |        |   |            |   |        |       |  |   |        |   |  |   | 6.37      | %
|                                           
|                                           
|                                           
|                                           
|Federal funds sold                          |  |      | 150,212   |   |      |   |        |      |  |   |        |   |  |      |        |   |            |   |        |       |  |   |        |   |  |   | 150,212   |  
|                                           
|                                           
|                                           
|                                           
|                                            |  |      | 5.90      | % |      |   |        |      |  |   |        |   |  |      |        |   |            |   |        |       |  |   |        |   |  |   | 5.90      | %
|                                           
|                                           
|                                           
|                                           
|U.S. treasuries and
government agencies     |  |      | 9,998     |   |      |   |        |      |  |   |        |   |  |      |        |   |            |   |        |       |  |   | 5,003   |   |  |   | 15,001    |  
|                                           
|                                           
|                                           
|                                           
|                                            |  |      | 4.67      | % |      |   |        |      |  |   |        |   |  |      |        |   |            |   |        |       |  |   | 7.87    | % |  |   | 5.74      | %
|                                           
|                                           
|                                           
|                                           
|Revenue bond                                |  |      | 500       |   |      |   |        |      |  |   |        |   |  |      |        |   |            |   |        |       |  |   | 3,286   |   |  |   | 3,786     |  
|                                           
|                                           
|                                           
|                                           
|                                            |  |      | 8.60      | % |      |   |        |      |  |   |        |   |  |      |        |   |            |   |        |       |  |   | 7.38    | % |  |   | 7.54      | %
|                                           
|                                           
|                                           
|                                           
|Trading securities                          |  |      |          |   |      |   | 1,646   |      |  |   | 1,950   |   |  |      | 1,614   |   |            |   | 1,335   |       |  |   | 4,318   |   |  |   | 10,863    |  
|                                           
|                                           
|                                           
|                                           
|                                            |  |      |          |   |      |   | 10.77   | %    |  |   | 10.77   | % |  |      | 10.77   | % |            |   | 10.77   | %     |  |   | 10.77   | % |  |   | 10.77     | %
|                                           
|                                           
|                                           
|                                           
|Mortgage-backed
securities  fixed          |  |      | 19,658    |   |      |   | 25,998  |      |  |   | 17,731  |   |  |      | 18,256  |   |            |   | 13,455  |       |  |   | 142,788 |   |  |   | 237,886   |  
|                                           
|                                           
|                                           
|                                           
|                                            |  |      | 6.53      | % |      |   | 6.56    | %    |  |   | 6.57    | % |  |      | 6.59    | % |            |   | 6.51    | %     |  |   | 6.47    | % |  |   | 6.50      | %
|                                           
|                                           
|                                           
|                                           
|Mortgage-backed
securities  variable       |  |      | 125,707   |   |      |   |        |      |  |   |        |   |  |      |        |   |            |   |        |       |  |   |        |   |  |   | 125,707   |  
|                                           
|                                           
|                                           
|                                           
|                                            |  |      | 6.99      | % |      |   |        |      |  |   |        |   |  |      |        |   |            |   |        |       |  |   |        |   |  |   | 6.99      | %
|                                           
|                                           
|                                           
|                                           
|Residual trading securities                 |  |      | 1,532     |   |      |   | 3,686   |      |  |   | 3,551   |   |  |      | 2,959   |   |            |   | 1,987   |       |  |   |        |   |  |   | 13,715    |  
|                                            |  |      |          |   |      |   |        |      |  |   |        |   |  |      |        |   |            |   |        |       |  |   |        |   |  |   |          |  
|                                           
|                                           
|                                           
|                                           
|FHLB stock                                  |  |      | 13,816    |   |      |   |        |      |  |   |        |   |  |      |        |   |            |   |        |       |  |   |        |   |  |   | 13,816    |  
|                                           
|                                           
|                                           
|                                           
|                                            |  |      | 7.75      | % |      |   |        |      |  |   |        |   |  |      |        |   |            |   |        |       |  |   |        |   |  |   | 7.75      | %
|                                           
|                                           
|                                           
|                                           
|Loans portfolio  fixed                     |  |      | 280,377   |   |      |   | 116,119 |      |  |   | 98,330  |   |  |      | 85,654  |   |            |   | 68,335  |       |  |   | 244,546 |   |  |   | 893,361   |  
|                                           
|                                           
|                                           
|                                           
|                                            |  |      | 8.95      | % |      |   | 8.60    | %    |  |   | 8.48    | % |  |      | 8.57    | % |            |   | 8.49    | %     |  |   | 8.37    | % |  |   | 8.62      | %
|                                           
|                                           
|                                           
|                                           
|Loans portfolio  variable                  |  |      | 599,228   |   |      |   | 45,895  |      |  |   | 62,171  |   |  |      | 89,131  |   |            |   | 19,242  |       |  |   | 2,313   |   |  |   | 817,980   |  
|                                           
|                                           
|                                           
|                                           
|                                            |  |      | 9.20      | % |      |   | 8.38    | %    |  |   | 8.22    | % |  |      | 8.16    | % |            |   | 8.55    | %     |  |   | 9.73    | % |  |   | 8.95      | %
|                                           
|                                           
|                                           
|                                           
|Mortgage servicing
rights                   |  |      | 2,044     |   |      |   | 1,895   |      |  |   | 1,744   |   |  |      | 1,597   |   |            |   | 1,449   |       |  |   | 7,328   |   |  |   | 16,057    |  
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|Liabilities                                
|                                           
|                                           
|                                           
|                                           
|Deposits                                    |  |      | 1,216,835 |   |      |   | 383,031 |      |  |   | 121,596 |   |  |      | 101,964 |   |            |   | 199,512 |       |  |   | 926     |   |  |   | 2,023,864 |  
|                                           
|                                           
|                                           
|                                           
|                                            |  |      | 5.64      | % |      |   | 5.67    | %    |  |   | 4.47    | % |  |      | 4.37    | % |            |   | 2.58    | %     |  |   | 5.33    | % |  |   | 5.21      | %
|                                           
|                                           
|                                           
|                                           
|Securities sold under
agreements to repurch |  |      | 41,581    |   |      |   |        |      |  |   |        |   |  |      |        |   |            |   |        |       |  |   |        |   |  |   | 41,581    |  
|                                           
|                                           
|                                           
|                                           
|                                            |  |      | 5.35      | % |      |   |        |      |  |   |        |   |  |      |        |   |            |   |        |       |  |   |        |   |  |   | 5.35      | %
|                                           
|                                           
|                                           
|                                           
|FHLB advances                               |  |      | 10        |   |      |   | 11      |      |  |   | 11      |   |  |      | 13      |   |            |   | 14      |       |  |   | 703     |   |  |   | 762       |  
|                                           
|                                           
|                                           
|                                           
|                                            |  |      | 6.85      | % |      |   | 6.85    | %    |  |   | 6.85    | % |  |      | 6.85    | % |            |   | 6.85    | %     |  |   | 6.85    | % |  |   | 6.85      | %
|                                           
|                                           
|                                           
|                                           
|Holding company senior
debt                 |  |      | 5,984     |   |      |   | 849     |      |  |   |        |   |  |      |        |   |            |   |        |       |  |   |        |   |  |   | 6,833     |  
|                                           
|                                           
|                                           
|                                           
|                                            |  |      | 8.41      | % |      |   | 8.41    | %    |  |   |        |   |  |      |        |   |            |   |        |       |  |   |        |   |  |   | 8.41      | %
|                                           
|                                           
|                                           
|                                           
|Convertible debentures                      |  |      |          |   |      |   |        |      |  |   |        |   |  |      |        |   |            |   |        |       |  |   | 14,712  |   |  |   | 14,712    |  
|                                           
|                                           
|                                           
|                                           
|                                            |  |      |          |   |      |   |        |      |  |   |        |   |  |      |        |   |            |   |        |       |  |   | 7.23    | % |  |   | 7.23      | %
|                                           
|                                           
|                                           
|                                           
|Subordinated debt                           |  |      | 2,750     |   |      |   |        |      |  |   |        |   |  |      |        |   |            |   |        |       |  |   |        |   |  |   | 2,750     |  
|                                           
|                                           
|                                           
|                                           
|                                            |  |      | 10.50     | % |      |   |        |      |  |   |        |   |  |      |        |   |            |   |        |       |  |   |        |   |  |   | 10.50     | %
|                                           
|                                           
|                                           
|                                           
|Unsecured notes                             |  |      | 3,500     |   |      |   |        |      |  |   |        |   |  |      |        |   |            |   |        |       |  |   |        |   |  |   | 3,500     |  
|                                           
|                                           
|                                           
|                                           
|                                            |  |      | 10.00     | % |      |   |        |      |  |   |        |   |  |      |        |   |            |   |        |       |  |   |        |   |  |   | 10.00     | %

12



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Supervision and Regulation

We are extensively regulated under both federal and state law. The following
is a brief summary of certain statutes, rules, and regulations affecting us.
This summary is qualified in its entirety by reference to the particular
statutory and regulatory provisions referenced below and is not intended to be
an exhaustive description of the statutes or regulations applicable to our
business. Supervision, regulation, and examination by the bank regulatory
agencies are intended primarily for the protection of depositors rather than
stockholders.

Regulation of the Company

We are a bank holding company registered with the Federal Reserve under the
Bank Holding Company Act of 1956, as amended (the BHC Act). We are subject to
the applicable provisions of the BHC Act and the supervision, examination, and
regulations of the Federal Reserve.

The BHC Act requires every bank holding company to obtain the prior approval of
the Federal Reserve before: (1) it may acquire direct or indirect ownership or
control of any voting shares of any bank if, after such acquisition, the bank
holding company will directly or indirectly own or control more than five
percent of the voting shares of the bank; (2) it or any of its subsidiaries,
other than a bank, may acquire all or substantially all of the assets of the
bank; or (3) it may merge or consolidate with any other bank holding company.
Similar federal statues require bank holding companies and other companies to
obtain the prior approval of the Office of Thrift and Supervision (OTS)
before acquiring ownership or control of a savings association.

The BHC Act further provides that the Federal Reserve may not approve any
transaction that would result in a monopoly or would be in furtherance of any
combination or conspiracy to monopolize or attempt to monopolize the business
of banking in any section of the United States, or the effect of which may be
substantially to lessen competition or to tend to create a monopoly in any
section of the country, or that in any other manner would be in restraint of
trade, unless the anti-competitive effects of the proposed transaction are
clearly outweighed by the public interest in meeting the convenience and needs
of the community served. The Federal Reserve is also required to consider the
financial and managerial resources and future prospects of the bank holding
companies and banks concerned and the convenience and needs of the communities
to be served. Considerations of financial resources generally focuses on
capital adequacy, and consideration of convenience and needs issues includes
the parties performance under the Community Reinvestment Act of 1977 (the
CRA).

The BHC Act, as amended by the interstate banking provisions of the Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994 (the Interstate
Banking Act), authorizes any bank holding company located in Florida to
acquire a bank located in any other state, and any bank holding company located
outside Florida may lawfully acquire any Florida-based bank, regardless of
state law to the contrary, in either case subject to certain
deposit-percentage, aging requirements, and other restrictions. The Interstate
Banking Act also generally provides that national and state-chartered banks may
branch interstate through acquisitions of banks in other states, unless a state
has opted out of the interstate branching provisions of the Interstate
Banking Act prior to June 1, 1997. Neither Florida nor any other state in the
southeastern United States has opted out. Accordingly, we would have the
ability to acquire a bank in a state in the Southeast and consolidate the newly
acquired bank and the Bank into a single bank with interstate branches.

The BHC Act, as currently in effect, generally prohibits us from engaging in
activities other than banking or managing or controlling banks or other
permissible subsidiaries and from acquiring or retaining direct or indirect
control of any company engaged in any activities other than those activities
determined by the Federal Reserve to be so closely related to banking or
managing or controlling banks as to be a proper incident thereto. In
determining whether a particular activity is permissible, the Federal Reserve
must consider whether the performance of such an activity reasonably can be
expected to produce benefits to the public, such as greater convenience,
increased competition, or gains in efficiency, that outweigh possible adverse
effects, such as undue concentration of resources, decreased or unfair
competition, conflicts of interest, or unsound banking practices.

13



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The Federal Reserve has determined that, as a general matter, bank holding
companies and their non-bank subsidiaries may engage in the following list of
activities:



| |  | operating a thrift subsidiary                                                                                                         
|- |  | --------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | factoring accounts receivable                                                                                                         
| 
| |  | acquiring or servicing loans                                                                                                          
| 
| |  | leasing personal property                                                                                                             
| 
| |  | conducting discount securities brokerage activities                                                                                   
| 
| |  | performing certain data processing services                                                                                           
| 
| |  | acting as agent or broker in selling credit life insurance and certain
other types of insurance in connection with credit transactions

The BHC Act does not place territorial limitations on permissible non-banking
activities of bank holding companies. Despite prior approval, the Federal
Reserve has the power to order a bank holding company or its non-bank
subsidiaries to terminate any activity or to terminate its ownership or control
of any subsidiary when it has reasonable cause to believe that continuation of
such activity or such ownership or control constitutes a serious risk to the
financial safety, soundness, or stability of any bank subsidiary of the holding
company.

Under Federal Reserve policy, bank holding companies are expected to act as a
source of financial strength and support to their subsidiary banks. This
support may be required at times when, absent such Federal Reserve policy, the
holding company may not be inclined to provide it. In addition, any capital
loans by a bank holding company to any bank subsidiary 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 payment.

On November 12, 1999, the President signed into law the Gramm-Leach-Bliley Act
(the Act), legislation that will permit commercial banks to affiliate with
investment banks and insurance companies through a holding company structure
and will expand the range of activities in which bank affiliates and
subsidiaries may engage. The Act repeals key provisions of the Glass-Steagall
Act of 1933 that have prohibited banks from affiliating with entities engaged
principally in securities underwriting activities. It also overrides those
state laws that prohibit affiliations of banks and insurance companies or
either discriminate against or have a substantially adverse effect on banks
selling insurance.

The Act amends the BHC Act to authorize new Financial Holding Companies
(FHC). Under the FHC provisions of the Act, a BHC can qualify to become a
FHC if all of its bank and thrift subsidiaries are well capitalized and well
managed and have a CRA rating of satisfactory or better. Once a BHC becomes
a FHC, it is permitted to conduct any securities, insurance and merchant
banking activities, as well as any other activities that are financial in
nature or incidental or complementary to a financial activity, such as
developing financial software, hosting internet web sites relating to financial
matters and operating a travel agency. Under the regulatory structure
prescribed by the Act, the Federal Reserve will act as the umbrella regulator
for the FHC, with each FHC subsidiary subject to supervision and regulation by
its own functional regulator or agency.

The Act also gives banks the option of conducting certain newly permitted
financial activities in a subsidiary rather than using a FHC. Banks that
satisfy the well capitalized, well managed and CRA requirements applicable to
FHCs will be able to establish financial subsidiaries that are permitted to
conduct all financial activities as agency and some financial activities as
principal such as securities underwriting. The main activities in which
financial subsidiaries currently are prohibited from engaging are insurance
underwriting, real estate development and merchant banking.

14



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Regulation of the Bank

The Bank is organized as a Florida-chartered commercial bank and is regulated
and supervised by the Department. The FDIC serves as its primary federal
regulator and the administrator of the fund that insures the Banks deposits.
The Department and the FDIC conduct regular examinations, reviewing the
adequacy of the loan loss reserves, quality of loans and investments, propriety
of management practices, compliance with laws and regulations, and other
aspects of operations. In addition to these regular examinations, the Bank
must file quarterly reports
containing detailed financial statements and schedules.

Federal and Florida banking laws and regulations govern all areas of the
operations of the Bank, including reserves, loans, mortgages, capital,
issuances of securities, payment of dividends, and establishment of branches.
As its primary regulators, the Department and the FDIC have authority to impose
penalties, initiate civil and administrative actions, and take other steps
intended to prevent the Bank from engaging in unsafe or unsound practices. The
Bank is a member of the Bank Insurance Fund (BIF) and, as such, deposits in
the Bank are insured by the FDIC to the maximum extent permissible by law.

The Bank is subject to the provisions of the CRA. Under the CRA, the Bank has
a continuing and affirmative obligation consistent with their safe and sound
operation to help meet the credit needs of their entire communities, including
low and moderate-income individuals and neighborhoods. The CRA does not
establish specific lending requirements or programs for financial institutions
nor does it limit the Banks discretion to develop the types of products and
services that it believes are best suited to their particular communities,
consistent with the CRA. The CRA requires the appropriate federal bank
regulatory agency (in the case of the Bank, the FDIC) in connection with their
regular examinations, to assess a financial institutions record in meeting the
credit needs of the community serviced by it, including low and moderate-income
neighborhoods. A federal banking agencys assessment of a financial
institutions CRA record is made available to the public. Further, such
assessment is required whenever the institution applies to, among other things,
establish a new branch that will accept deposits, relocate an existing office
or merge or consolidate with, or acquire the assets of or assume the
liabilities of, a federally-regulated financial institution. In the case where
the Company applies for approval to acquire a bank or other bank holding
company, the federal regulator approving the transaction will also assess the
CRA records of the Bank. The Bank received a Satisfactory CRA rating in its
most recent examination.

In April 1995, the federal banking agencies substantially revised their CRA
regulations. Among other things, the amended CRA regulations, which became
fully effective in 1997, substitute for the prior process-based assessment
factors a new evaluation system that rates an institution based on its actual
performance in meeting community needs. In particular, the system focuses on
three tests: (1) a lending test, to evaluate the institutions record of making
loans in its service areas; (2) an investment test, to evaluate the
institutions record of investing in community development projects; and (3) a
service test, to evaluate the institutions delivery of services through its
branches and other offices. The amended CRA regulations also clarify how an
institutions CRA performance will be considered in the application process.

Transactions with Affiliates

There are multiple restrictions on the extent to which the Company and any
future non bank subsidiaries can borrow or otherwise obtain credit from the
Bank. There are also restrictions on the Banks purchase of, or investment in,
the securities or other assets of the Company. In the event such transactions
are permissible, they must be on the same terms and circumstances, including
credit standards, that are substantially the same, or at least as favorable to
the Bank, as those prevailing at the time for comparable transactions with
non-affiliated companies. No such transactions existed at December 31, 2000.

15



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Deposit Insurance

The Bank is subject to FDIC deposit insurance assessments. The Bank is subject
to a risk-based assessment system for insured depository institutions that
takes into account the risks attributable to different categories and
concentrations of assets and liabilities. This system assigns an institution
to one of three capital categories: (1) well capitalized; (2) adequately
capitalized; and (3) undercapitalized. An institution is also assigned, by the
FDIC, to one of three supervisory subgroups within each capital group. The
supervisory subgroup to which an institution is assigned is based on a
supervisory evaluation provided to the FDIC by the institutions primary
federal regulator and information which the FDIC determines to be relevant to
the institutions financial condition and the risk posed to the deposit
insurance funds (which may include, if applicable, information provided by the
institutions state supervisor). An institutions insurance assessment rate is
then determined based on the capital category and supervisory category to which
it is assigned, and attributed to the deposit insurance funds. Under the
risk-based assessment system, there are nine assessment risk classifications
(i.e., combinations of capital groups and supervisory subgroups) to which
different assessment rates are applied. Assessment rates on deposits for an
institution in the highest category (i.e., well capitalized and healthy)
are less than assessment rates on deposits for an institution in the lowest
category (i.e., undercapitalized and substantial supervisory concern).

The Bank, as a state-chartered commercial bank, is a member of BIF. However as
part of the acquisitions the Bank has undertaken in the past, the Bank acquired
deposits previously insured by the Savings Association Insurance Fund (the
SAIF). Based on these acquisitions, the Bank is required to pay insurance
premiums to the FDIC on a substantial portion of its deposits at the SAIF
assessment rate notwithstanding its status as a BIF member. As of September
30, 2000, the most recent measurement date for assessment purposes,
approximately 63.1% of the Banks deposits was treated as SAIF-insured
deposits, with the remaining 36.9% of deposits being assessed at the BIF rate.

Prior to enactment of the Deposit Insurance Funds Act of 1996 (the Funds
Act), only assessments against SAIF member institutions were available to pay
interest on the so-called FICO Bonds, which were issued by the Financing
Corporation (the FICO) in the late 1980s to fund the resolution of troubled
thrifts. The Funds Act shifted a portion of the FICO funding obligations to the
BIF member institutions beginning in 1997. Through the end of 1999, the FICO
assessment rate on BIF-assessable deposits was required by the statute to be
one-fifth of the SAIF rate. Beginning January 1, 2000, the FDIC equalized the
FICO assessment rates for members of both insurance funds at 0.0212 percent.
In 2000, the Banks total FICO payment obligation was $464,000, $295,000 of
which was attributable to the Banks SAIF-assessable deposits and the balance
of which was attributable to its BIF-assessable deposits.

Capital Requirements

We are required to comply with the capital adequacy standards established by
the Federal Reserve (for the Company), and the FDIC (for the Bank). The minimum
capital requirements applicable to the Company and the Bank are essentially the
same. Failure to meet capital guidelines could subject us to a variety of
enforcement remedies, including issuance of a capital directive, the
termination of deposit insurance by the FDIC, a prohibition on the taking of
brokered deposits, and certain other restrictions on our business, including
growth and dividend restrictions. Substantial additional restrictions can be
imposed upon us if we fail to meet applicable capital requirements under the
federal prompt corrective action regulations. As of December 31, 2000, the
Banks capital ratios were considered well capitalized for purposes of the
agencies guidelines.

For additional information regarding capital requirements applicable to the
Company and the Bank and their compliance with such requirements see Note 16.
Regulatory Capital Requirements.

Payment of Dividends

As a Florida-chartered commercial bank, the Bank is subject to the laws of
Florida as to the payment of dividends. Under the Florida Financial
Institutions Code, the prior approval of the Department is required if the
total of all dividends declared by a bank in any calendar year will exceed the
sum of a banks net retained profits

16



---



(net income less any dividends paid) for
that year and its retained net profits for the preceding two years. As of
January 1, 2001, the Bank maintained a net retained profit surplus for dividend
payment purposes of $3.6 million.

Under Federal law, if, in the opinion of the FDIC, the bank is engaged in or is
about to engage in an unsafe or unsound practice (which, depending on the
financial condition of the depository institution, could include the payment of
dividends), the FDIC may require, after notice and hearing, that the Bank cease
and desist from such practice. The federal banking agencies have indicated
that paying dividends that deplete a depository institutions capital base to
an inadequate level would be an unsafe and unsound banking practice. Under the
Prompt Corrective Action regulations adopted by the federal banking agencies in
December 1992, the Bank may not pay any dividend to the Company if such payment
would cause it to become undercapitalized.

Federal Reserve System

The Bank is a member of the Federal Reserve system, which is used primarily for
the settlement of funds between member banks. The Federal Reserve regulations
require banks to maintain noninterest earning reserves against their
transaction accounts (primarily NOW and regular checking accounts). The
Federal Reserve Board regulations, effective November 30, 1999, generally
require that reserves be maintained against aggregate transaction accounts as
follows: (1) for accounts aggregating $37.3 million or less (as of January 1,
2001, subject to adjustment by the Federal Reserve) the reserve requirement is
3.0%; and (2) for accounts greater than $37.3 million, the reserve requirement
is 10.0% (subject to adjustment by the Federal Reserve between 8.0% and 14.0%)
against that portion of total transaction accounts in excess of $37.3 million.
The first $5.5 million of otherwise reservable balances (subject to adjustments
by the Federal Reserve) are exempted from the reserve requirements. The
balances maintained to meet the reserve requirements imposed by the Federal
Reserve may be used to satisfy liquidity requirements imposed by the
Department. Because required reserves must be maintained in the form of either
vault cash, a noninterest bearing account at a Federal Reserve Bank or a
pass-through account as defined by the Federal Reserve, the effect of this
reserve requirement is to reduce the Banks interest earning assets. FHLB
system members, including the Bank, also are authorized to borrow from the
Federal Reserve discount window, but Federal Reserve regulations require
institutions to exhaust all FHLB sources before borrowing from a Federal
Reserve Bank.

Federal Home Loan Bank System

The Bank is a member of the Federal Home Loan Bank (FHLB) system. The FHLB
system, which consists of 12 regional Federal Home Loan Banks is governed and
regulated by the Federal Housing Finance Board (the FHFB). The FHLB provides
a central credit facility for member institutions. As a member of the FHLB, we
are required to acquire and hold shares of capital stock in the FHLB in an
amount at least equal to the greater of one percent of the aggregate principal
amount of our unpaid residential mortgage loans, home purchase contracts and
similar obligations as of the close of each calendar year, or five percent of
our borrowings from the FHLB (including advances and letters of credit issued
by the FHLB on our behalf).

The FHLB makes advances to members in accordance with policies and procedures
periodically established by the FHFB and the board of directors of the FHLB.
Currently, outstanding advances from the FHLB are required to be secured by a
members shares of stock in the FHLB and by certain types of mortgages and
other assets. Interest rates charged for advances vary depending on maturity,
the cost of funds to the FHLB and the purpose of the borrowing. As of December
31, 2000, we had $761,000 of outstanding advances from the FHLB.

Liquidity

Under Florida banking regulations, we are required to maintain a daily
liquidity position equal to at least 15% of our total transaction accounts and
eight percent of our total non-transaction accounts, less those deposits of
public funds for which security has been pledged as provided by law. We may
satisfy our liquidity requirements with cash on hand (including cash items in
process of collection), deposits held with the Federal Reserve, demand deposits
due from correspondent banks, federal funds sold, interest bearing deposits
maturing in 31 days or less

17



---



and the market value of certain unencumbered,
rated, investment-grade securities and securities issued by Florida or any
county, municipality of other political subdivision within the state. The
Department and FDIC review our liquidity position as part of their
examinations. If we fail to comply with the liquidity requirements, we
generally may not further diminish liquidity either by making any new loans
(other than by discounting or purchasing bills of exchange payable at sight) or
by paying dividends. At December 31, 2000, the Banks net liquid assets
exceeded
the minimum amount required under the applicable Florida regulations.

Monetary Policy and Economic Controls

The banking business is affected not only by general economic conditions, but
also by the monetary policies of the Federal Reserve. Changes in the discount
rate on member bank borrowing, availability of borrowing at the discount
window, open market operations, the imposition of changes in reserve
requirements against bank deposits and the imposition of and changes in reserve
requirements against certain borrowings by banks and their affiliates are some
of the instruments of monetary policy available to the Federal Reserve. The
monetary policies have had a significant effect on the operating results of
commercial banks and are expected to continue to do so in the future. The
monetary policies of the Federal Reserve are influenced by various factors,
including inflation, unemployment, short and long-term changes in the
international trade balance and in the fiscal policies of the United States
Government. Future monetary policies and the effect of such policies on the
future business and earnings of the Bank cannot be predicted.

Effects of Inflation

As a financial institution, the majority of our assets are monetary in nature
and, therefore, differ greatly from those of more industrial or commercial
companies that have significant investments in fixed assets. The effects of
inflation on the financial condition and results of operations, therefore, are
less significant than the effects of changes in interest rates. The most
significant effect of inflation is on noninterest expense, which tends to rise
during periods of general inflation.

Changes in Accounting Standards

The Financial Accounting Standards Board (FASB) recently adopted or issued
proposals and guidelines that may have a significant impact on the accounting
practices of commercial enterprises in general and financial institutions in
particular.

Accounting for Derivative Instruments and Hedging Activities

In June 1998, the FASB issued Statements of Financial Accounting Standards
(SFAS) No. 133, Accounting for Derivative Instruments and Hedging
Activities. SFAS No. 133 establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, (collectively referred to as derivatives) and for hedging
activities. It requires that entities recognize all derivatives as either
assets or liabilities in the statement of financial position and measure those
instruments at fair value. In June 1999, the FASB issued SFAS No. 137,
Accounting for Derivative Instruments and Hedging Activities  Deferral of the
Effective Date of FASB Statement No. 133, which delayed the date of
implementation to all fiscal quarters of all fiscal years beginning after June
15, 2000. In June, 2000, the FASB issued SFAS No. 138, Accounting for Certain
Derivative Instruments and Certain Hedging Activities  an amendment of SFAS
No. 133, which amends the accounting and reporting standards of SFAS No. 133
for certain derivative instruments and certain hedging activities. The
adoption of SFAS No. 133 on January 1, 2001, did not have a material effect
upon our results of operations.

Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities (a replacement of SFAS No. 125)

In September 2000, the FASB issued SFAS No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities (a replacement
of SFAS No. 125). SFAS No. 140 revises the standards for accounting for
securitizations and other transfers of financial assets and collateral and
requires certain disclosures, but carries over most of SFAS No. 125s
provisions without reconsideration. SFAS No. 140 is effective for transfers
and servicing of financial assets and extinguishment of liabilities occurring
after March

18



---



31, 2001 and requires additional disclosures relating to previous
securitization transactions and collateral for the fiscal years ending after
December 15, 2000. Management does not believe that the adoption of SFAS
No.140 will have a material effect upon our results of operations.

Recognition of Interest Income and Impairment on Purchased and Retained
Beneficial Interest in Securitized Financial Assets

In January 2001, the Emerging Issues Task Force issued EITF 99-20, Recognition
of Interest Income and
Impairment on Purchased and retained Beneficial Interests in Securitized
Financial Assets, which provides guidance on the method used for the
recognition and measurement of interest income and impairment of those retained
interests. EITF 99-20 provides for a transition date of March 15, 2001. We do
not believe that the adoption of EITF 99-20 will have a material effect upon
our results of operations.

Item 2. PROPERTIES

At December 31, 2000, we had 80 branch offices, of which 39 were leased and 41
were owned. In addition, we have six non-branch facilities. Five of these are
leased and one is owned. Substantially all of our furniture, fixtures and
equipment items are owned. The following table shows the name, location and
lease expiration date (if applicable) for each facility as of December 31,
2000:

|                                                                                     |  |                                
|------------------------------------------------------------------------------------ |  | -------------------------------
|Location:                                                                            |  | Ownership/Lease Expiration Date
|                                                                                     |  |                                
|Broward County:                                                                     
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|Causeway Office
450 East Eau Gallie Boulevard
Indian Harbour Beach, Florida 32937    |  | Facility owned                 
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|Melbourne Office
1300 Babcock Street
Melbourne, Florida 32901                        |  | Facility owned                 
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|Melbourne Beach Office
401 Ocean Avenue
Melbourne Beach, Florida 32951               |  | May 1, 2009                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|Palm Bay Office
6000 Babcock Street, SE
Palm Bay, Florida 32909                      |  | May 31, 2004                   
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|Suntree Office
6430 North Wickham Road
Melbourne, Florida 32940                      |  | Facility owned                 
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|Broward County:                                                                     
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|Century Village Office
1886 West Hillsboro Boulevard
Deerfield Beach, Florida 33442  |  | June 30, 2005                  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|Deerfield Office
1327 South Military Trail
Deerfield Beach, Florida 33442            |  | April 30, 2003                 
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|East Oakland Office
3101 North Federal Highway
Suite 100
Oakland Park, Florida 33306 |  | January 14, 2004               

19



---



|                                                                                                                                                     |  |                                           
|---------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|PROPERTIES (contd)                                                                                                                                 
|Location:                                                                                                                                            |  | Ownership/Lease
Expiration Date           
|                                                                                                                                                     |  |                                           
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Hollywood Mall Office
3251 Hollywood Blvd.
Suite 470
Hollywood, Florida 33021                                                                        |  | May 31, 2005                              
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Pembroke Commons Office
502 University Drive
Pembroke Pines, Florida 33024
 
Pine Island Office
300 South Pine Island Road
Plantation, Florida 33324 |  | February 26, 2001
April 30, 2004          
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Port Royale Office
6550 North Federal Highway
Ft. Lauderdale, Florida 33308                                                                          |  | January 31, 2003                          
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Shenandoah Office
13636 West State Road 84
Davie, Florida 33325-5303                                                                                 |  | Facility owned
Ground Lease (May 31, 2009)
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Weston Office
1290 Weston Road
Weston, Florida 33326                                                                                                 |  | September 30, 2008                        
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Collier County:
 
Naples Fifth Avenue Office
691 Fifth Avenue South
Naples, Florida 34102                                                            |  | August 11, 2001                           
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Columbia County:
 
Lake City Office
100 North First Street
Lake City, Florida 32055                                                                  |  | Facility owned                            
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Dade County:
 
Airpark Office
720 NW 57th Avenue
Miami, Florida 33126                                                                                |  | October 31, 2009                          
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Coral Gables Office
2222 Ponce De Leon Boulevard
Coral Gables, Florida 33134                                                                         |  | November 5, 2008                          
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Doral Office
9785 NW 41st Street
Miami, Florida 33178                                                                                                |  | Facility owned                            
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|South Miami Office
8211 South Dixie Highway
Miami, Florida 33143                                                                                     |  | February 28, 2003                         
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Town & Country Office
11631 North Kendall Drive
Miami, Florida 33176                                                                                 |  | March 31, 2001                            

20



---



|                                                                        |  |                                
|----------------------------------------------------------------------- |  | -------------------------------
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|PROPERTIES (contd)                                                    
|Location:                                                               |  | Ownership/Lease Expiration Date
|                                                                        |  |                                
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Hernando County:                                                       
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Spring Hill Office
5331 Spring Hill Drive
Spring Hill, Florida 34606    |  | May 21, 2006                   
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Hillsborough County:                                                   
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|South Brandon Office
404 Oakfield Drive
Brandon, Florida 33511          |  | Facility owned                 
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Sun City Office
3880 Sun City Center Boulevard
Ruskin, Florida 33573    |  | Facility owned                 
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Lee County:                                                            
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Cape Coral Office
1321 Southeast 47th Terrace
Cape Coral, Florida 33904 |  | Facility owned                 
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Manatee County:                                                        
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|53rd Avenue Office
415 53rd Avenue West
Bradenton, Florida 34207        |  | Facility owned                 
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Bayshore Office
6208 14th Street West
Bradenton, Florida 34207          |  | Facility owned                 
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Downtown Bradenton Office
1301 6th Avenue West
Bradenton, Florida 34205 |  | Facility owned                 
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Ellenton Office
3510 U.S. Highway 301
Ellenton, Florida 34222           |  | Facility owned                 
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Ironwood Office
4302 Cortez Road West
Bradenton, Florida 34210          |  | Facility owned                 
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Mt. Vernon Office
9819 Cortez Road West
Bradenton, Florida 34210        |  | Facility owned                 
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Westside Office
5905 Manatee Avenue West
Bradenton, Florida 34209       |  | Facility owned                 
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Marion County:                                                         
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Forest Office
15825 East Highway 40
Silver Springs, Florida 34488       |  | Facility owned                 

21



---



|                                                                                         |  |                                
|---------------------------------------------------------------------------------------- |  | -------------------------------
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|PROPERTIES (contd)                                                                     
|Location:                                                                                |  | Ownership/Lease Expiration Date
|                                                                                         |  |                                
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Marion County (contd)                                                                  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Midtown Office
One NE First Avenue, Suite 100
Ocala, Florida 34470                       |  | August 31, 2001                
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Paddock Office
3033 SW College Road
Ocala, Florida 34474                                 |  | April 17, 2001                 
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Silver Springs Office
5431-A East Silver Springs Boulevard
Silver Springs, Florida 34488 |  | Facility owned                 
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Monroe County:
 
Key West Office
1010 Kennedy Drive
Key West, Florida 33040              |  | Facility owned                 
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Marathon Office
6090 Overseas Highway
Marathon, Florida 33050                            |  | Facility owned                 
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Plantation Key Office
90184 Overseas Highway
Tavernier, Florida 33070                    |  | Facility owned                 
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Orange County:
 
Downtown Orlando Office
255 South Orange Avenue
Orlando, Florida 32801  |  | February 28, 2002              
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|North Orange Office
2415 North Orange Avenue
Orlando, Florida 32804                      |  | November 30, 2003              
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Winter Garden Office
232 South Dillard Street
Winter Garden, Florida 34787               |  | Facility owned                 
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Osceola County:                                                                         
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Bermuda Office
1115 John Young Parkway
Kissimmee, Florida 34741                          |  | Facility owned                 
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Broadway Office
200 East Broadway
Kissimmee, Florida 34741                               |  | Facility owned                 
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Mill Creek Office
1300 East Vine Street
Kissimmee, Florida 34744                         |  | Facility owned                 
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Ninth Street Office
1220 Ninth Street
St. Cloud, Florida 34769                           |  | December 31, 2002              

22



---



|                                                                                                  |  |                                
|------------------------------------------------------------------------------------------------- |  | -------------------------------
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|PROPERTIES (contd)                                                                              
|Location:                                                                                         |  | Ownership/Lease Expiration Date
|                                                                                                  |  |                                
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Osceola County (contd)                                                                          
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Oak Park Office
4291 13th Street
St. Cloud, Florida 34769                                         |  | Facility owned                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Palm Beach County:                                                                               
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Boca Hamptons Office
9060 Kimberly Boulevard
Boca Raton, Florida 33434                            |  | January 31, 2002               
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Kings Point Office
6630 West Atlantic Avenue
Delray Beach, Florida 33446                         |  | September 30, 2005             
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Lake Worth Office
7753 Lake Worth Road
Lake Worth, Florida 33467                                  |  | Month-to-month lease           
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Pasco County:                                                                                    
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Gulf View Square Mall Office
9501 U.S. 19 North
Port Richey, Florida 34668                        |  | April 30, 2005                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Holiday Office
4649 Sunray Drive
Holiday, Florida 34690                                           |  | December 7, 2004               
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Holiday Drive-up
4649-A Sunray Drive
Holiday, Florida 34690                                       |  | Facility owned                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|New Port Richey Office
6500 Massachusetts Avenue
New Port Richey, Florida 34653                   |  | Facility owned                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Pinellas County:                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Belleair Bluffs Office
401 North Indian Rocks Road
Belleair Bluffs, Florida 33770                 |  | Facility owned                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Caladesi Office
2678 Bayshore Boulevard
Dunedin, Florida 34698                                    |  | Facility owned                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Corporate Headquarters and Branch
111 Second Avenue N.E., Suite 211
St. Petersburg, Florida 33701 |  | December 13, 2004              
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Countryside Office
28050 U.S. 19 North
Clearwater, Florida 33761                                  |  | April 30, 2005                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Disston Plaza Office
3739 49th Street North
St. Petersburg, Florida 33710                         |  | May 31, 2001                   

23



---



|                                                                            |  |                                               
|--------------------------------------------------------------------------- |  | ----------------------------------------------
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|PROPERTIES (contd)                                                        
|Location:                                                                   |  | Ownership/Lease Expiration Date               
|                                                                            |  |                                               
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Pinellas County (contd)                                                   
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Dunedin Office
1478 Main Street
Dunedin, Florida 34698                      |  | Facility owned                                
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|East Lake Woodlands
3412 East Lake Road
Palm Harbor, Florida 34685          |  | March 31, 2007                                
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Highland Avenue Office
1831 Highland Avenue North
Clearwater, Florida 33755 |  | Facility owned                                
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|ICOT Office
5801 Ulmerton Road
Clearwater, Florida 33760                    |  | December 31, 2003                             
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Largo Mall Office
10500 Ulmerton Road E, #816
Largo, Florida 33771          |  | February 28, 2004                             
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Missouri Office
1235 South Missouri Avenue
Clearwater, Florida 33756        |  | December 31, 2005                             
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Northeast Office
182 37th Avenue North
St. Petersburg, Florida 33704        |  | Facility owned
Ground lease June 30, 2018     
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Northwood Office
3024 Enterprise Road
Clearwater, Florida 33759             |  | February 28, 2006                             
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Oldsmar Office
3711 Tampa Road, Suite 101
Oldsmar, Florida 34677            |  | March 31, 2001                                
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Palm Harbor Office
33920 U.S. 19 North
Palm Harbor, Florida 34684           |  | October 31, 2002                              
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Pinellas Park Office
7600 66th Street North
Pinellas Park, Florida 33781    |  | Facility owned                                
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Pinellas Point Office
3000 54th Avenue South
St. Petersburg, Florida 33712  |  | October 14, 2006 (Ground lease)
Facility owned

24



---



|                                                                                          |  |                                                 
|----------------------------------------------------------------------------------------- |  | ------------------------------------------------
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|PROPERTIES (contd)                                                                      
|Location:                                                                                 |  | Ownership/Lease Expiration Date                 
|                                                                                          |  |                                                 
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Pinellas County (contd)                                                                 
|St. Petersburg Office
100 34th Street North
St. Petersburg, Florida 33713                 |  | Facility owned                                  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Seminole Office
8000 113th Street North
Seminole, Florida 33772-4801                      |  | September 30, 2007 (Ground lease)
Facility owned
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Sunset Point Office
23684 U.S. 19 North
Clearwater, Florida 33765                         |  | November 30, 2004                               
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Tyrone Office
6900 22nd Avenue North
St. Petersburg, Florida 33710                        |  | October 31, 2004                                
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Walsingham Office
14141 Walsingham Road
Largo, Florida 33774                              |  | Facility owned                                  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Sarasota County:                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Sarasota Office & Loan Production Office
1100 South Tamiami Trail
Sarasota, Florida 34236 |  | Facility owned                                  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Venice Office
400 Venice By-pass North
Venice, Florida 34292                              |  | Facility owned                                  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Seminole County:                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Lake Howell Office
1980 Howell Branch Road
Winter Park, Florida 32792                     |  | Facility owned                                  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Suwannee County:                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Live Oak Office
535 Ohio Avenue South
Live Oak, Florida 32060                             |  | Facility owned                                  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Volusia County:                                                                          
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Ormond Beach Office
193 East Granada Boulevard
Ormond Beach, Florida 32176                |  | October 31, 2004                                

25



---



|                                                                                       |  |                                
|-------------------------------------------------------------------------------------- |  | -------------------------------
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|PROPERTIES (contd)                                                                   
|Location:                                                                              |  | Ownership/Lease Expiration Date
|                                                                                       |  |                                
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Other Florida Facilities:                                                             
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Republic Bank Operations Center
1400 66th Street North
St. Petersburg, Florida 33710   |  | Facility owned                 
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Vacant Operations Center Annex
1500 66th Street North
St. Petersburg, Florida 33710    |  | October 31, 2012               
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Sublet Office Space
28051 U.S. 19 North, Suite G
Clearwater, Florida 34621             |  | June 30, 2006                  
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Vacant Office Space
1028 58th Street North
St. Petersburg, Florida 33710               |  | May 31, 2001                   
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Tampa Loan Production Office
1411 North Westshore Blvd.
Suite 300
Tampa, Florida 33607 |  | November 30, 2001              
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Sublet Office Space
123 Moody Street
Waltham, MA 02154                                 |  | September 30, 2002             

Item 3. LEGAL PROCEEDINGS

In November 1999, 18 former shareholders of Bankers Savings Bank, F.S.B.
(BSB) filed a claim against us in the Miami-Dade County, Florida, Circuit
Court that alleges we had knowledge of and failed to disclose to BSB and to
their shareholders, prior to acquiring BSB in November 1998, the loss incurred
for the fourth quarter of 1998 which resulted from the now-discontinued
mortgage banking activities. The claim alleges breach of contract, fraud,
negligent misrepresentation and violation of the Florida Securities and
Investor Protection Act. The plaintiffs have alleged damages generally in an
amount exceeding $1 million. This matter has been scheduled for trial in the
second quarter of 2001. We believe the plaintiffs claims are without merit
and will vigorously defend against this action.

We are subject to various legal proceedings in the ordinary course of business.
Based on information presently available, we do not believe that the ultimate
outcome in such proceedings, in the aggregate, would have a material adverse
effect on our financial position or results of operations.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Information required by this item is incorporated by reference from our Proxy
Statement for the 2001 Annual Meeting.

26



---






PART II




Item 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Trading Market

Our common stock is currently traded on the NASDAQ National Market under the
symbol REPB The table below shows, the high, low and closing bid information
for the common stock as regularly quoted on the NASDAQ National Market for the
periods indicated.

|                                 |  |      |       |     |  |         |       |  |  |  |       | 
|-------------------------------- |  | ---- | ----- | --- |  | ------- | ----- |  |  |  | ----- | 
|                                 |  | High |       | Low |  | Closing
|                                 |  |      |       |     |  |        
|Quarter ended March 31, 1999     |  |      | 23.19 |     |  |         | 13.25 |  |  |  | 21.38 | 
|                                
|                                
|                                
|                                
|Quarter ended June 30, 1999      |  |      | 22.25 |     |  |         | 18.19 |  |  |  | 20.50 | 
|                                
|                                
|                                
|                                
|Quarter ended September 30, 1999 |  |      | 19.50 |     |  |         | 14.44 |  |  |  | 14.50 | 
|                                
|                                
|                                
|                                
|Quarter ended December 31, 1999  |  |      | 15.63 |     |  |         | 12.25 |  |  |  | 12.50 | 
|                                
|                                
|                                
|                                
|Quarter ended March 31, 2000     |  |      | 15.88 |     |  |         | 10.63 |  |  |  | 12.63 | 
|                                
|                                
|                                
|                                
|Quarter ended June 30, 2000      |  |      | 13.50 |     |  |         | 9.47  |  |  |  | 12.00 | 
|                                
|                                
|                                
|                                
|Quarter ended September 30, 2000 |  |      | 12.13 |     |  |         | 9.38  |  |  |  | 9.63  | 
|                                
|                                
|                                
|                                
|Quarter ended December 31, 2000  |  |      | 9.84  |     |  |         | 8.63  |  |  |  | 9.25  | 

These over-the-counter market quotations reflect inter-dealer prices, without
retail mark-up, markdown, or commission and may not necessarily reflect actual
transactions.

Stockholders and Dividends

As of December 31, 2000, there were approximately 3,927 beneficial owners of
our common stock. As a parent holding company of a Florida-chartered
commercial bank, our ability to receive dividends from the Bank and to pay
dividends to our stockholders are subject to the laws of Florida as to the
payment of dividends. Under the Florida Financial Institutions Code, the prior
approval of the Department is required if the total of all dividends declared
by a bank in any calendar year will exceed the sum of the banks net profits
for that year and its retained net profits for the preceding two years. At
January 1, 2001, the Banks net retained profits for 1999 and 2000 were a
surplus of $3.6 million.

To date, the Company has not paid dividends on its common stock. Dividends
declared in 2000 and 1999 were quarterly dividends totaling $.88 per share on
the 75,000 shares of our noncumulative perpetual preferred convertible stock
that is outstanding. (See Note 14. Stockholders Equity).




Item 6. SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated operating data, per share data, balance
sheet data and selected financial ratios as of and for each of the years ended
December 31, 1996 through 2000, were derived from the audited consolidated
financial statements.

The following information should be read in conjunction with Item 7.
Managements Discussion and Analysis of Financial Condition and Results of
Operations and the consolidated financial statements, related notes and other
financial information presented elsewhere.

27



---



Selected Consolidated Financial and Other Data
($ in thousands, except share and per share data, financial ratios
and other data)

|                                                             |                                          |   |                          |        |      |   |            |        |      |   |           |        |  |   |           |        |  |   |           |        |  |  | 
|------------------------------------------------------------ | ---------------------------------------- | - | ------------------------ | ------ | ---- | - | ---------- | ------ | ---- | - | --------- | ------ |  | - | --------- | ------ |  | - | --------- | ------ |  |  | 
|                                                             |                                          |   | Years Ended December 31, |       
|                                                             |                                          |   |                         
|                                                             |                                          |   | 2000                     |        | 1999 |   | 1998       |        | 1997 |   | 1996     
|                                                             |                                          |   |                          |        |      |   |            |        |      |   |          
|OPERATING DATA:                                             
|                                                            
|                                                            
|                                                            
|                                                            
|Interest income                                              |                                          | $ | 197,200                  |        |      | $ | 190,763    |        |      | $ | 172,793   |        |  | $ | 117,834   |        |  | $ | 99,058    |       
|                                                            
|                                                            
|                                                            
|                                                            
|Interest expense                                             |                                          |   | 107,477                  |        |      |   | 98,380     |        |      |   | 89,609    |        |  |   | 60,742    |        |  |   | 51,245    |       
|                                                             |                                          |   |                          |        |      |   |            |        |      |   |           |        |  |   |           |        |  |   |           |       
|Net interest income                                          |                                          |   | 89,723                   |        |      |   | 92,383     |        |      |   | 83,184    |        |  |   | 57,092    |        |  |   | 47,813    |       
|                                                            
|                                                            
|                                                            
|                                                            
|Loan loss provision                                          |                                          |   | 20,700                   |        |      |   | 9,923      |        |      |   | 14,261    |        |  |   | 3,247     |        |  |   | 2,758     |       
|                                                             |                                          |   |                          |        |      |   |            |        |      |   |           |        |  |   |           |        |  |   |           |       
|Net interest income after loan loss provision                |                                          |   | 69,023                   |        |      |   | 82,460     |        |      |   | 68,923    |        |  |   | 53,845    |        |  |   | 45,055    |       
|                                                            
|                                                            
|                                                            
|                                                            
|Noninterest income                                           |                                          |   | 7,311                    |        |      |   | 25,832     |        |      |   | 56,157    |        |  |   | 29,451    |        |  |   | 10,531    |       
|                                                            
|                                                            
|                                                            
|                                                            
|Gain on sale of ORE held for investment                      |                                          |   |                         |        |      |   |           |        |      |   |          |        |  |   |          |        |  |   | 1,207     |       
|                                                            
|                                                            
|                                                            
|                                                            
|Operating expenses                                           |                                          |   | 75,525                   |        |      |   | 84,430     |        |      |   | 129,017   |        |  |   | 65,420    |        |  |   | 44,788    |       
|                                                            
|                                                            
|                                                            
|                                                            
|Merger/acquisition expenses                                  |                                          |   |                         |        |      |   |           |        |      |   | 3,233     |        |  |   | 1,144     |        |  |   |          |       
|                                                            
|                                                            
|                                                            
|                                                            
|Restructuring costs                                          |                                          |   |                         |        |      |   |           |        |      |   | 6,673     |        |  |   |          |        |  |   |          |       
|                                                            
|                                                            
|                                                            
|                                                            
|SAIF special assessment                                      |                                          |   |                         |        |      |   |           |        |      |   |          |        |  |   |          |        |  |   | 4,818     |       
|                                                            
|                                                            
|                                                            
|                                                            
|Provision for losses on ORE                                  |                                          |   | 225                      |        |      |   | 80         |        |      |   | 1,603     |        |  |   | 530       |        |  |   | 111       |       
|                                                            
|                                                            
|                                                            
|                                                            
|Other noninterest (income) expense                           |                                          |   | 422                      |        |      |   | (307       | )      |      |   | (40       | )      |  |   | 396       |        |  |   | (490      | )     
|                                                            
|                                                            
|                                                            
|                                                            
|Amort. of goodwill & premium on deposits                     |                                          |   | 3,858                    |        |      |   | 3,910      |        |      |   | 1,930     |        |  |   | 479       |        |  |   | 491       |       
|                                                             |                                          |   |                          |        |      |   |            |        |      |   |           |        |  |   |           |        |  |   |           |       
|Income (loss) before income taxes and
minority interest      |                                          |   | (3,696                   | )      |      |   | 20,179     |        |      |   | (17,336   | )      |  |   | 15,327    |        |  |   | 7,075     |       
|                                                            
|                                                            
|                                                            
|                                                            
|Income tax benefit (expense)                                 |                                          |   | 787                      |        |      |   | (7,800     | )      |      |   | 6,602     |        |  |   | (6,165    | )      |  |   | (2,772    | )     
|                                                            
|                                                            
|                                                            
|                                                            
|Minority interest in income from subsidiary trust            |                                          |   | (1,689                   | )      |      |   | (1,687     | )      |      |   | (1,687    | )      |  |   | (701      | )      |  |   |          |       
|                                                            
|                                                            
|                                                            
|                                                            
|Minority interest in FFO                                     |                                          |   |                         |        |      |   |           |        |      |   |          |        |  |   | (674      | )      |  |   | (505      | )     
|                                                             |                                          |   |                          |        |      |   |            |        |      |   |           |        |  |   |           |        |  |   |           |       
|Net income (loss)                                            |                                          | $ | (4,598                   | )      |      | $ | 10,692     |        |      | $ | (12,421   | )      |  | $ | 7,787     |        |  | $ | 3,798     |       
|                                                             |                                          |   |                          |        |      |   |            |        |      |   |           |        |  |   |           |        |  |   |           |       
|Earnings (loss) per share  basic                            |                                          | $ | (.46                     | )      |      | $ | .99        |        |      | $ | (1.34     | )      |  | $ | 1.12      |        |  | $ | .55       |       
|                                                             |                                          |   |                          |        |      |   |            |        |      |   |           |        |  |   |           |        |  |   |           |       
|Weighted average shares outstanding  basic                  |                                          |   | 10,555,941               |        |      |   | 10,484,650 |        |      |   | 9,286,813 |        |  |   | 6,693,970 |        |  |   | 6,423,130 |       
|                                                             |                                          |   |                          |        |      |   |            |        |      |   |           |        |  |   |           |        |  |   |           |       
|Earnings (loss) per share diluted                           |                                          | $ | (.46                     | )      |      | $ | .95        |        |      | $ | (1.34     | )      |  | $ | 1.01      |        |  | $ | .53       |       
|                                                             |                                          |   |                          |        |      |   |            |        |      |   |           |        |  |   |           |        |  |   |           |       
|Weighted average shares outstanding  diluted                |                                          |   | 10,555,941               |        |      |   | 11,299,902 |        |      |   | 9,286,813 |        |  |   | 7,920,926 |        |  |   | 7,204,217 |       
|                                                             |                                          |   |                          |        |      |   |            |        |      |   |           |        |  |   |           |        |  |   |           |       
|BALANCE SHEET DATA:                                         
|                                                            
|                                                            
|                                                            
|                                                            
|Total assets                                                 |                                          | $ | 2,440,604                |        |      | $ | 2,566,026  |        |      | $ | 2,505,117 |        |  | $ | 1,678,831 |        |  | $ | 1,365,845 |       
|                                                            
|                                                            
|                                                            
|                                                            
|Investment & mortgage backed securities                      |                                          |   | 406,957                  |        |      |   | 453,008    |        |      |   | 129,783   |        |  |   | 115,769   |        |  |   | 170,392   |       
|                                                            
|                                                            
|                                                            
|                                                            
|Loans held for sale                                          |                                          |   |                         |        |      |   |           |        |      |   | 184,176   |        |  |   | 187,226   |        |  |   | 98,349    |       
|                                                            
|                                                            
|                                                            
|                                                            
|Loans held in portfolio                                      |                                          |   | 1,711,342                |        |      |   | 1,889,892  |        |      |   | 1,896,289 |        |  |   | 1,215,900 |        |  |   | 976,222   |       
|                                                            
|                                                            
|                                                            
|                                                            
|Allowance for loan losses                                    |                                          |   | 33,462                   |        |      |   | 28,177     |        |      |   | 28,077    |        |  |   | 22,023    |        |  |   | 19,774    |       
|                                                            
|                                                            
|                                                            
|                                                            
|Goodwill & premium on deposits                               |                                          |   | 28,969                   |        |      |   | 32,827     |        |      |   | 36,916    |        |  |   | 4,855     |        |  |   | 527       |       
|                                                            
|                                                            
|                                                            
|                                                            
|Deposits                                                     |                                          |   | 2,157,817                |        |      |   | 2,293,209  |        |      |   | 2,187,412 |        |  |   | 1,471,679 |        |  |   | 1,237,211 |       
|                                                            
|                                                            
|                                                            
|                                                            
|Stockholders equity                                         |                                          |   | 172,341                  |        |      |   | 170,245    |        |      |   | 163,597   |        |  |   | 102,530   |        |  |   | 75,961    |       
|                                                            
|                                                            
|                                                            
|                                                            
|Book value per share (dollars)                               |                                          |   | 15.24                    |        |      |   | 15.06      |        |      |   | 14.77     |        |  |   | 12.28     |        |  |   | 10.59     |       
|                                                            
|                                                            
|                                                            
|                                                            
|SELECTED FINANCIAL RATIOS:                                  
|                                                            
|                                                            
|                                                            
|                                                            
|Return on average assets                                     |                                          |   | (0.18                    | )%     |      |   | 0.42       | %      |      |   | (0.58     | )%     |  |   | 0.53      | %      |  |   | 0.29      | %     
|                                                            
|                                                            
|                                                            
|                                                            
|Return on average equity                                     |                                          |   | (2.65                    | )      |      |   | 6.39       |        |      |   | (7.91     | )      |  |   | 9.46      |        |  |   | 5.11      |       
|                                                            
|                                                            
|                                                            
|                                                            
|Equity to assets                                             |                                          |   | 7.06                     |        |      |   | 6.63       |        |      |   | 6.53      |        |  |   | 6.11      |        |  |   | 5.56      |       
|                                                            
|                                                            
|                                                            
|                                                            
|Equity & minority interest in preferred subsidiary to assets |                                          |   | 8.24                     |        |      |   | 7.75       |        |      |   | 7.68      |        |  |   | 7.82      |        |  |   | 5.56      |       
|                                                            
|                                                            
|                                                            
|                                                            
|Net interest spread                                          |                                          |   | 3.34                     |        |      |   | 3.57       |        |      |   | 3.71      |        |  |   | 3.64      |        |  |   | 3.57      |       
|                                                            
|                                                            
|                                                            
|                                                            
|Net interest margin                                          |                                          |   | 3.76                     |        |      |   | 3.92       |        |      |   | 4.12      |        |  |   | 4.08      |        |  |   | 3.93      |       
|                                                            
|                                                            
|                                                            
|                                                            
|Operating expense to average assets (1)                      |                                          |   | 2.99                     |        |      |   | 3.35       |        |      |   | 2.76      |        |  |   | 3.23      |        |  |   | 3.33      |       
|                                                            
|                                                            
|                                                            
|                                                            
|Operating efficiency ratio (1)                               |                                          |   | 77.83                    |        |      |   | 71.42      |        |      |   | 70.12     |        |  |   | 72.35     |        |  |   | 75.28     |       
|                                                            
|                                                            
|                                                            
|                                                            
|Loan/deposit ratio  excludes loans held for sale            |                                          |   | 79.31                    |        |      |   | 82.41      |        |      |   | 86.69     |        |  |   | 82.62     |        |  |   | 78.71     |       
|                                                            
|                                                            
|                                                            
|                                                            
|Nonperforming loans to loans                                 |                                          |   | 2.96                     |        |      |   | 1.33       |        |      |   | 1.94      |        |  |   | 2.41      |        |  |   | 2.31      |       
|                                                            
|                                                            
|                                                            
|                                                            
|Nonperforming assets to total assets                         |                                          |   | 2.33                     |        |      |   | 1.22       |        |      |   | 1.71      |        |  |   | 2.31      |        |  |   | 2.35      |       
|                                                            
|                                                            
|                                                            
|                                                            
|Loan loss allowance to loans                                 |                                          |   | 1.96                     |        |      |   | 1.49       |        |      |   | 1.48      |        |  |   | 1.81      |        |  |   | 2.03      |       
|                                                            
|                                                            
|                                                            
|                                                            
|Loan loss allowance to nonperforming loans:                 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Originated portfolio                     |   |                          | 65.19  |      |   |            | 137.61 |      |   |           | 77.06  |  |   |           | 89.26  |  |   |           | 66.79  | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | March 1995 purchase                      |   |                          | 199.25 |      |   |            | 246.89 |      |   |           | 108.06 |  |   |           | 373.91 |  |   |           | 488.78 | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Crossland portfolio                      |   |                          |       |      |   |            | 24.63  |      |   |           | 43.50  |  |   |           | 421.88 |  |   |           | 126.12 | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | July 1997 purchase                       |   |                          |       |      |   |            |       |      |   |           | 35.70  |  |   |           | 31.74  |  |   |           | N/A    | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Other purchased portfolios               |   |                          |       |      |   |            | 14.03  |      |   |           | 113.69 |  |   |           | 18.41  |  |   |           | 89.80  | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Total portfolio loans                    |   |                          | 66.12  |      |   |            | 112.04 |      |   |           | 76.25  |  |   |           | 75.21  |  |   |           | 87.61  | 
|                                                            
|                                                            
|                                                            
|                                                            
|OTHER DATA (AT PERIOD-END):                                 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Number of branches                       |   |                          | 80     |      |   |            | 81     |      |   |           | 62     |  |   |           | 48     |  |   |           | 46     | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Number of full time equivalent employees |   |                          | 995    |      |   |            | 1,000  |      |   |           | 1,733  |  |   |           | 1,165  |  |   |           | 930    | 



---

|(1) |  | Ratios prior to 1999 include the commercial banking segment only.
|--- |  | -----------------------------------------------------------------

28



---



Item 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our balance sheets and statements of
operations should be read in conjunction with Item 6. Selected Consolidated
Financial Data, the consolidated financial statements and the related notes
included elsewhere therein.

Years Ended December 31, 2000 and 1999

Comparison of Balance Sheets at December 31, 2000 and 1999

Overview

Our total assets were $2.4 billion at December 31, 2000, and $2.6 billion at
December 31, 1999, a decrease of $125.4 million or 4.89%. The mix of our asset
base changed substantially during the year as a result of the reinvestment of
funds from repayments of loans, primarily warehouse lines of credit and
residential mortgages, and the sale of $41.5 million of High LTV Loans, into
federal funds sold.

Investment, Mortgage-Backed and Mortgage-Related Securities

Investments consisting of U.S. Treasury and federal agency securities
(Investment Securities), mortgage-backed securities (MBS) and
mortgage-related securities (Mortgage-Related Securities) were $407.0 million
at December 31, 2000, compared to $453.0 million at December 31, 1999, a
decrease of $46.1 million or 10.2%, mainly as a result of commercial paper
maturing without replacement. At December 31, 2000, $348.5 million of
securities were classified as available for sale, $33.8 million of MBS were
classified as held to maturity and $24.6 million of mortgage-related securities
were trading assets. Included in the trading asset category were: (1) a $10.9
million subordinate tranche purchased from our securitization of High LTV Loans
in June 1998; (2) $10.2 million in overcollateralization and residual
interests in cash flows from a $60.0 million securitization in December 1997
and a $240.0 million securitization in June 1998; and (3) $3.5 million
representing the excess spread on mortgage servicing rights.

The market values assigned to the MBS classified as available for sale were
derived using market quotations at December 31, 2000. Trading assets are
evaluated at least quarterly with any valuation adjustment reflected as a
trading gain or loss in the statement of operations. Under applicable
accounting rules, use of quoted market values is the preferred method for
valuing trading assets. However, where the market for those assets is illiquid
and price quotations are not readily available, other methods are permitted,
including techniques utilizing the present value of expected cash flows. We
have used present value techniques to value our trading assets.

In previous periods and again in the fourth quarter of 2000, we conducted an
extensive analysis of the credit quality of the loans underlying the trading
assets related to High LTV Loan securitizations by obtaining current credit
scores on the borrowers. Based on that analysis which indicated some
deterioration in the quality of the loans underlying the residual interest and
on the historical loss history of those loans, an adjustment was made to the
expected cumulative losses on each securitization (expressed as total lifetime
losses as a percent of the original balance of loans in the securitization).
The cumulative loss factor for the securitization completed in December 1997
was increased from a previous estimate of 15% to a current estimate of 23%.
The cumulative loss factor for the securitization completed in June 1998 was
increased from a previous estimate of 12% to a current estimate of 20%. A
trading loss of $13.5 million was recorded for 2000 based on the revised
valuation. We believe these valuations are a reasonable approximation of the
fair market value of the mortgage related securities classified as trading
assets; however, there is no assurance that we could realize these values if
such assets were sold in the current illiquid market for High LTV-related
assets.

29



---



Loans

Total loans were $1.7 billion at December 31, 2000, compared to $1.9 billion at
December 31, 1999, a decrease of $178.6 million, or 9.4%. During the fourth
quarter of 2000, we sold $41.5 million of High LTV Loans for an amount slightly
above their book value. The sale comprised most of the $54.7 million reduction
of High LTV Loans for 2000. Other reductions in the loan portfolio included:
(1) a decline of $57.0 million in warehouse lines of credit; (2) a decrease of
$92.5 million of first lien residential mortgages; and (3) a decline of $27.4
million of commercial real estate, multifamily and construction and land
development loans. These reductions were partially offset by a $34.3 million
increase in commercial business loans and a $29.6 million increase in home
equity loans that were originated through the Banks retail network.

Allowance for Loan Losses

The allowance for loan losses amounted to $33.5 million (1.96% of portfolio
loans) at December 31, 2000, compared with $28.2 million (1.49% of portfolio
loans) at December 31, 1999. At December 31, 2000, the allowance for loan
losses included $32.8 million related to loans originated by us and $648,000
from discount allocations for the March 1995 purchased loans. During 2000 we
recorded a $20.7 million provision for loan losses. Other activity included
$15.0 million of loan charge-offs (net of recoveries) and $389,000 reallocated
from the allowance to loan discount. Net chargeoffs for the year included
losses of $5.6 million on High LTV Loans and $5.0 million from warehouse lines
of credit deemed uncollectible. We also charged off $1.6 million of
residential loans and $1.2 million of home equity loans, both comprised
primarily of loans originated in the 1997-98 timeframe. At December 31, 2000,
the ratio of the allowance for loan losses to nonperforming loans was 66.12%
compared to 112.04% at the end of 1999.

Nonperforming Assets

Nonperforming assets amounted to $57.0 million or 2.33% of total assets at
December 31, 2000, compared with $31.2 million or 1.22% of total assets at
December 31, 1999. The increase resulted from two loans placed in
nonperforming status in the third quarter of 2000; a $15.3 million loan secured
by a hotel in Wilmington, Delaware, and a $13.1 million residential development
loan in Naples, Florida. These two assets comprised 56.1% of total
nonperforming loans. Nonperforming loans (including the two loans previously
mentioned) totaled $50.6 million (or 2.96% of total loans) at December 31,
2000, an increase of $25.5 million from December 31, 1999. Nonperforming
one-to-four family residential mortgage loans decreased by $4.3 million, while
nonperforming warehouse lines of credit and home equity loans increased $2.8
million. ORE increased $397,000 from $5.3 million at December 31, 1999, to
$5.7 million at December 31, 2000.

Deposits

Total deposits were $2.2 billion at December 31, 2000, compared to $2.3 billion
at December 31, 1999, a decrease of $135.4 million or 5.90%. The mix of total
deposits during 2000 changed somewhat with time deposits comprising 62.5% of
the total at year-end 2000, compared with 63.1% at the end of 1999.
Transaction accounts, including checking and money market accounts were 28.2%
of total deposits and savings deposits were 9.3% at year-end 2000 compared to
23.4% and 13.5%, respectively, at the end of 1999. Overall, since year-end
1999, certificates of deposit have declined $96.9 million, which reflected the
increasingly competitive market for deposit accounts. Checking accounts
(including non-retail deposits such as official checks) decreased $12.8
million, while savings deposits declined by $110.1 million. These reductions
were partially offset by a $84.4 million increase in money market deposits.

Senior Debt

As of December 31, 2000, our Senior Debt, comprised of a loan from SunTrust
Bank, N.A. (SunTrust) totaled $6.8 million. We restructured the terms of our
Senior Debt in December 2000 and made a principal reduction of $2.0 million on
January 2, 2001. The $4.8 million remainder will be fully amortized in equal
installments over an 18-month period beginning in January 2001.

The terms of the Senior Debt were amended to require, among other things: (1)
an interest rate based on the 90-day LIBOR plus 1.75%, effective December 26,
2000; (2) monthly principal repayments of $268,518 plus

30



---



accrued interest
payable on the last banking day of each month until maturity on June 30, 2002;
and (3) that, upon written request from SunTrust at any time, for any reason
whatsoever, Mr. William R. Hough, our Chairman of the Board and principal
shareholder, will purchase the loan from SunTrust.

The December amendment reset all of the financial convenants of the Senior Debt
with the next measurement date occurring on March 31, 2001. These covenants
require us to: (1) maintain our ratio of nonperforming assets to portfolio
loans plus other real estate owned at no more than three and one half percent;
(2) maintain our debt service coverage ratio at no less than 1.9 to one through
June 30, 2001, and at two to one thereafter; and (3) maintain cash balances in
the holding company at $1.0 million in excess over that amount required
pursuant to the Convertible Debenture Bond Indenture through June 30, 2001,
after which time the excess amount required will increase to $2.0 million.

Stockholders Equity

Stockholders equity was $172.3 million at December 31, 2000, or 7.06% of total
assets, compared to $170.2 million or 6.63% of total assets at December 31,
1999. At December 31, 2000, the Banks tier 1 (leverage) capital ratio was
7.18%, its tier 1 risk-based capital ratio was 11.69%, and its total risk-based
capital ratio was 12.94%, all in excess of minimum FDIC guidelines for an
institution to be considered a well-capitalized bank, while the same ratios
for the Company were 6.30%, 10.27% and 12.69%.

Comparison of Results of Operations for the Year Ended December 31, 2000 and
1999

Overview

Operating earnings prior to special charges for the year ended December 31,
2000, were $4.3 million or $.38 per share. These earnings exclude an after-tax
valuation charge of $8.9 million or $.84 per share on two investments related
to high loan-to-value loans. Including the valuation charge, a net loss of
$4.6 million or $.46 per share was incurred for 2000. For 1999, operating
earnings, prior to after-tax valuations charge on the two high loan-to-value
related investments of $400,000, were $11.1 million or $.99 per share while net
income was $10.7 million or $.95 per share. The loss provision in 2000 was
$20.7 million compared to a 1999 provision of $9.9 million. Return on average
assets for the year ended December 31, 2000, was a negative
 .18%, compared to .42% for the same period in 1999. The return on average equity was a negative
2.65%, compared with 6.39% for the same period in 1999.

Analysis of Net Interest Income (see table on page 32)

Net interest income for the year ended December 31, 2000 was $89.7 million,
compared to $92.4 million for the same period in 1999, a $2.7 million, or 2.88%
decrease. Average asset yield increased 17 basis points from 8.10% for the
year ended December 31, 1999, to 8.27% or the same period in 2000. However, a
$6.4 million increase in interest income was more than offset by a $9.1 million
increase in interest expense. The average cost of interest bearing liabilities
increased 40 basis points from 4.53% to 4.93%. Net interest spread, the
difference between asset yield and cost of funds, decreased 23 basis points to
3.34%. Net interest margin, which includes the benefit of noninterest bearing
funds, decreased from 3.92% for the year ended December 31, 1999, to 3.76% for
the same period in 2000. Management estimates that the increase in
nonperforming assets in 2000 reduced net interest income by approximately $1.9
million and reduced the net interest margin by eight basis points or one-half
of the total 16 basis point decrease.

31



---



The following table summarizes the average yields earned on interest earning
assets and the average rates paid on interest bearing liabilities for the years
ended December 31, 2000 and 1999 ($ in thousands):

|                                        |                                    |  |                          |           |          |   |         |         |         |  |          |      |         |  |           |           |  |   |         |         |  |  |      |      |  
|--------------------------------------- | ---------------------------------- |  | ------------------------ | --------- | -------- | - | ------- | ------- | ------- |  | -------- | ---- | ------- |  | --------- | --------- |  | - | ------- | ------- |  |  | ---- | ---- | -
|                                        |                                    |  | Years Ended December 31,
|                                        |                                    |  |                         
|                                        |                                    |  | 2000                     |           | 1999    
|                                        |                                    |  |                          |           |         
|                                        |                                    |  | Average                  |           | Average  |   |         |         |         |  | Average  |      | Average
|                                        |                                    |  | Balance                  |           | Interest |   | Rate    |         | Balance |  | Interest |      | Rate   
|                                        |                                    |  |                          |           |          |   |         |         |         |  |          |      |        
|Summary of Average Rates               
|                                       
|                                       
|                                       
|                                       
|Interest earning assets:               
|                                       
|                                       
|                                       
|                                       
|                                        | Loans, net                         |  | $                        | 1,840,150 |          |   | $       | 162,776 |         |  |          | 8.85 | %       |  | $         | 1,916,399 |  |   | $       | 166,656 |  |  |      | 8.70 | %
|                                       
|                                       
|                                       
|                                       
|                                        | Investment securities              |  |                          | 20,737    |          |   |         | 1,232   |         |  |          | 5.94 |         |  |           | 39,501    |  |   |         | 2,075   |  |  |      | 5.25 |  
|                                       
|                                       
|                                       
|                                       
|                                        | Mortgage backed securities         |  |                          | 381,342   |          |   |         | 25,355  |         |  |          | 6.65 |         |  |           | 207,587   |  |   |         | 12,840  |  |  |      | 6.19 |  
|                                       
|                                       
|                                       
|                                       
|                                        | Trading securities                 |  |                          | 37,579    |          |   |         | 1,170   |         |  |          | 3.11 |         |  |           | 57,058    |  |   |         | 2,224   |  |  |      | 3.90 |  
|                                       
|                                       
|                                       
|                                       
|                                        | Interest bearing deposits in banks |  |                          | 6,309     |          |   |         | 421     |         |  |          | 6.69 |         |  |           | 8,595     |  |   |         | 424     |  |  |      | 4.93 |  
|                                       
|                                       
|                                       
|                                       
|                                        | FHLB stock                         |  |                          | 13,816    |          |   |         | 1,079   |         |  |          | 7.81 |         |  |           | 13,287    |  |   |         | 991     |  |  |      | 7.46 |  
|                                       
|                                       
|                                       
|                                       
|                                        | Federal funds sold                 |  |                          | 80,928    |          |   |         | 5,055   |         |  |          | 6.14 |         |  |           | 104,527   |  |   |         | 5,206   |  |  |      | 4.91 |  
|                                       
|                                       
|                                       
|                                       
|                                        | Commercial paper                   |  |                          | 1,877     |          |   |         | 112     |         |  |          | 5.87 |         |  |           | 5,808     |  |   |         | 347     |  |  |      | 5.89 |  
|                                        |                                    |  |                          |           |          |   |         |         |         |  |          |      |         |  |           |           |  |   |         |        
|Total interest earning assets           |                                    |  | 2,382,738                |           |          |   | 197,200 |         |         |  | 8.27     |      |         |  | 2,352,762 |           |  |   | 190,763 |         |  |  | 8.10 |     
|                                       
|                                       
|                                       
|                                       
|                                        | Noninterest earning assets         |  |                          | 145,625   |          |   |         |         |         |  |          |      |         |  |           | 165,995   | 
|                                        |                                    |  |                          |           |          |   |         |         |         |  |          |      |         |  |           |          
|                                        | Total assets                       |  | $                        | 2,528,363 |          |   |         |         |         |  |          |      |         |  | $         | 2,518,757 | 
|                                        |                                    |  |                          |           |          |   |         |         |         |  |          |      |         |  |           |          
|Interest bearing liabilities:          
|                                       
|                                       
|                                       
|                                       
|                                        | Interest checking                  |  | $                        | 180,171   |          |   | $       | 1,396   |         |  |          | 0.77 | %       |  | $         | 177,592   |  |   | $       | 1,419   |  |  |      | 0.80 | %
|                                       
|                                       
|                                       
|                                       
|                                        | Money market                       |  |                          | 280,593   |          |   |         | 12,252  |         |  |          | 4.37 |         |  |           | 200,550   |  |   |         | 7,481   |  |  |      | 3.73 |  
|                                       
|                                       
|                                       
|                                       
|                                        | Savings                            |  |                          | 60,934    |          |   |         | 1,003   |         |  |          | 1.65 |         |  |           | 68,693    |  |   |         | 1,143   |  |  |      | 1.66 |  
|                                       
|                                       
|                                       
|                                       
|                                        | Passbook gold                      |  |                          | 179,092   |          |   |         | 7,317   |         |  |          | 4.09 |         |  |           | 278,562   |  |   |         | 11,604  |  |  |      | 4.17 |  
|                                       
|                                       
|                                       
|                                       
|                                        | Time deposits                      |  |                          | 1,409,303 |          |   |         | 80,926  |         |  |          | 5.74 |         |  |           | 1,371,047 |  |   |         | 72,486  |  |  |      | 5.29 |  
|                                       
|                                       
|                                       
|                                       
|                                        | FHLB advances                      |  |                          | 1,188     |          |   |         | 81      |         |  |          | 6.85 |         |  |           | 3,230     |  |   |         | 164     |  |  |      | 5.06 |  
|                                       
|                                       
|                                       
|                                       
|                                        | Subordinated debt                  |  |                          | 14,690    |          |   |         | 1,062   |         |  |          | 7.23 |         |  |           | 4,003     |  |   |         | 289     |  |  |      | 7.22 |  
|                                       
|                                       
|                                       
|                                       
|                                        | Other holding company debt         |  |                          | 11,660    |          |   |         | 1,135   |         |  |          | 9.72 |         |  |           | 26,671    |  |   |         | 1,988   |  |  |      | 7.45 |  
|                                       
|                                       
|                                       
|                                       
|                                        | Other borrowings                   |  |                          | 42,066    |          |   |         | 2,305   |         |  |          | 5.48 |         |  |           | 39,968    |  |   |         | 1,806   |  |  |      | 4.52 |  
|                                        |                                    |  |                          |           |          |   |         |         |         |  |          |      |         |  |           |           |  |   |         |        
|                                        | Total interest bearing liabilities |  |                          | 2,179,697 |          |   |         | 107,477 |         |  |          | 4.93 |         |  |           | 2,170,316 |  |   |         | 98,380  |  |  |      | 4.53 |  
|                                       
|                                       
|                                       
|                                       
|                                        | Noninterest bearing liabilities    |  |                          | 176,479   |          |   |         |         |         |  |          |      |         |  |           | 180,860   | 
|                                       
|                                       
|                                       
|                                       
|                                        | Stockholders equity               |  |                          | 172,187   |          |   |         |         |         |  |          |      |         |  |           | 167,581   | 
|                                        |                                    |  |                          |           |          |   |         |         |         |  |          |      |         |  |           |          
|                                        | Total liabilities and equity       |  | $                        | 2,528,363 |          |   |         |        |         |  |          |      |         |  | $         | 2,518,757 |  |   |         |        | 
|                                       
|                                       
|                                       
|                                       
|                                        |                                    |  |                          |           |          |   |         |         |         |  |          |      |         |  |           |           |  |   |         |        
|                                       
|                                       
|                                       
|                                       
|Net interest income/net interest spread |                                    |  |                          |           |          | $ | 89,723  |         |         |  | 3.34     | %    |         |  |           |           |  | $ | 92,383  |         |  |  | 3.57 | %   
|                                        |                                    |  |                          |           |          |   |         |         |         |  |          |      |         |  |           |           |  |   |         |         |  |  |     
|Net interest margin                     |                                    |  |                          |           |          |   |         |         |         |  | 3.76     | %    |         |  |           |           |  |   |         |         |  |  | 3.92 | %   
|                                        |                                    |  |                          |           |          |   |         |         |         |  |          |      |         |  |           |           |  |   |         |         |  |  |      |     

|                                |                                    |   |        |        |                             |      |      |       |       |   |        |        |   |  | 
|------------------------------- | ---------------------------------- | - | ------ | ------ | --------------------------- | ---- | ---- | ----- | ----- | - | ------ | ------ | - |  | 
|                                |                                    |   |        |        | Increase (Decrease) Due to: |     
|                                |                                    |   |        |        |                             |     
|Changes in Net Interest Income  |                                    |   | Volume |        |                             | Rate |      |       | Total |  
|                                |                                    |   |        |        |                             |      |      |       |       |  
|Interest earning assets:       
|                               
|                               
|                               
|                               
|                                | Loans, net                         |   | $      | (8,046 | )                           |      | $    | 4,166 |       |   | $      | (3,880 | )
|                               
|                               
|                               
|                               
|                                | Investment securities              |   |        | (895   | )                           |      |      | 52    |       |   |        | (843   | )
|                               
|                               
|                               
|                               
|                                | Mortgage backed securities         |   |        | 11,507 |                             |      |      | 1,008 |       |   |        | 12,515 |  
|                               
|                               
|                               
|                               
|                                | Trading securities                 |   |        | (604   | )                           |      |      | (450  | )     |   |        | (1,054 | )
|                               
|                               
|                               
|                               
|                                | Interest bearing deposits in banks |   |        | (130   | )                           |      |      | 127   |       |   |        | (3     | )
|                               
|                               
|                               
|                               
|                                | FHLB stock                         |   |        | 42     |                             |      |      | 46    |       |   |        | 88     |  
|                               
|                               
|                               
|                               
|                                | Federal funds sold                 |   |        | (1,301 | )                           |      |      | 1,150 |       |   |        | (151   | )
|                               
|                               
|                               
|                               
|                                | Commercial paper                   |   |        | (234   | )                           |      |      | (1    | )     |   |        | (235   | )
|                                |                                    |   |        |        |                             |      |      |       |       |   |        |       
|                                | Total change in interest income    |   |        | 339    |                             |      |      | 6,098 |       |   |        | 6,437  |  
|                               
|                               
|                               
|                               
|Interest bearing liabilities:  
|                               
|                               
|                               
|                               
|                                | Interest checking                  |   |        | 23     |                             |      |      | (47   | )     |   |        | (24    | )
|                               
|                               
|                               
|                               
|                                | Money market                       |   |        | 3,349  |                             |      |      | 1,422 |       |   |        | 4,771  |  
|                               
|                               
|                               
|                               
|                                | Savings                            |   |        | (127   | )                           |      |      | (13   | )     |   |        | (140   | )
|                               
|                               
|                               
|                               
|                                | Passbook gold                      |   |        | (4,066 | )                           |      |      | (221  | )     |   |        | (4,287 | )
|                               
|                               
|                               
|                               
|                                | Time deposits                      |   |        | 3,925  |                             |      |      | 4,515 |       |   |        | 8,440  |  
|                               
|                               
|                               
|                               
|                                | FHLB advances                      |   |        | (148   | )                           |      |      | 66    |       |   |        | (82    | )
|                               
|                               
|                               
|                               
|                                | Subordinated debt                  |   |        | 773    |                             |      |      |      |       |   |        | 773    |  
|                               
|                               
|                               
|                               
|                                | Other holding company debt         |   |        | (1,309 | )                           |      |      | 456   |       |   |        | (853   | )
|                               
|                               
|                               
|                               
|                                | Other borrowings                   |   |        | 121    |                             |      |      | 378   |       |   |        | 499    |  
|                                |                                    |   |        |        |                             |      |      |       |       |   |       
|                                | Total change in interest expense   |   |        | 2,541  |                             |      |      | 6,556 |       |   |        | 9,097  |  
|                                |                                    |   |        |        |                             |      |      |       |       |   |       
|Decrease in net interest income |                                    | $ | (2,202 | )      |                             | $    | (458 | )     |       | $ | (2,660 | )     
|                                |                                    |   |        |        |                             |      |      |       |       |   |       

32



---



Noninterest Income

Noninterest income for the year ended December 31, 2000, was $7.3 million
compared with $25.8 million for the same period in 1999, a decrease of $18.5
million. There were several reasons for the reduction, which included: (1) the
$13.5 million valuation charge relating to our retained interest on High LTV
securitizations; (2) gains on sale of branch deposits of $1.1 million and gains
on branch relocations of $1.3 million, both recorded in 1999; and (3) a $3.1
million decrease in gains on sale of loans. Service fees on deposits in 2000
improved by $1.1 million, primarily from the introduction of several new
fee-generating programs.

The following table reflects the components of noninterest income for the years
ended December 31, 2000 and 1999 ($ in thousands):

|                                    |  |                                  |         |      |  |            |        |   |  |          |         |  
|----------------------------------- |  | -------------------------------- | ------- | ---- |  | ---------- | ------ | - |  | -------- | ------- | -
|                                    |  | For the Years Ended December 31,
|                                    |  |                                 
|                                    |  |                                  |         |      |  |            |        |   |  | Increase
|                                    |  | 2000                             |         | 1999 |  | (Decrease)
|                                    |  |                                  |         |      |  |           
|Service charges on deposit accounts |  | $                                | 7,923   |      |  | $          | 6,833  |   |  | $        | 1,090   |  
|                                   
|                                   
|                                   
|                                   
|Loan service fees                   |  |                                  | 5,951   |      |  |            | 6,584  |   |  |          | (633    | )
|                                   
|                                   
|                                   
|                                   
|Other loan fee income               |  |                                  | 4,324   |      |  |            | 4,281  |   |  |          | 43      |  
|                                   
|                                   
|                                   
|                                   
|Gain on sale of loans, net          |  |                                  | 543     |      |  |            | 3,602  |   |  |          | (3,059  | )
|                                   
|                                   
|                                   
|                                   
|Gain on sale of securities, net     |  |                                  | 240     |      |  |            |       |   |  |          | 240     |  
|                                   
|                                   
|                                   
|                                   
|Net trading securities (loss) gain  |  |                                  | (13,492 | )    |  |            | (714   | ) |  |          | (12,778 | )
|                                   
|                                   
|                                   
|                                   
|Gain on sale of branch deposits     |  |                                  |        |      |  |            | 1,098  |   |  |          | (1,098  | )
|                                   
|                                   
|                                   
|                                   
|Gain on branch relocation(s)        |  |                                  |        |      |  |            | 1,289  |   |  |          | (1,289  | )
|                                   
|                                   
|                                   
|                                   
|Other income                        |  |                                  | 1,822   |      |  |            | 2,859  |   |  |          | (1,037  | )
|                                    |  |                                  |         |      |  |            |        |   |  |          |         |  
|Total noninterest income            |  | $                                | 7,311   |      |  | $          | 25,832 |   |  | $        | (18,521 | )
|                                    |  |                                  |         |      |  |            |        |   |  |          |         |  

Noninterest Expense

Total noninterest expenses for the year ended December 31, 2000, were $80.0
million, compared with $88.1 million for the same period in 1999, a decrease of
$8.1 million. Operating expenses for the year ended December 31, 2000,
included in the noninterest expense total, were $75.5 million, compared with
$84.4 million for the same period in 1999, a decrease of $8.9 million. Most of
the decrease resulted from cost savings following discontinuation of mortgage
banking activities in 1999 and several cost containment programs initiated
throughout 2000. Compensation expenses were lower by $4.3 million while costs
associated with postage, supplies and other administrative expenses declined
$3.3 million.

[Balance of page intentionally left blank]

33



---



The following table reflects the components of noninterest expense for the
years ended December 31, 2000 and 1999 ($ in thousands):

|                                               |  |                                  |        |      |  |            |        |   |  |          |        |  
|---------------------------------------------- |  | -------------------------------- | ------ | ---- |  | ---------- | ------ | - |  | -------- | ------ | -
|                                               |  | For the Years Ended December 31,
|                                               |  |                                 
|                                               |  |                                  |        |      |  |            |        |   |  | Increase
|                                               |  | 2000                             |        | 1999 |  | (Decrease)
|                                               |  |                                  |        |      |  |           
|Salaries and benefits                          |  | $                                | 37,456 |      |  | $          | 41,716 |   |  | $        | (4,260 | )
|                                              
|                                              
|                                              
|                                              
|Net occupancy expense                          |  |                                  | 15,939 |      |  |            | 15,958 |   |  |          | (19    | )
|                                              
|                                              
|                                              
|                                              
|Advertising and marketing                      |  |                                  | 1,037  |      |  |            | 1,103  |   |  |          | (66    | )
|                                              
|                                              
|                                              
|                                              
|Data processing fees and services              |  |                                  | 4,629  |      |  |            | 4,823  |   |  |          | (194   | )
|                                              
|                                              
|                                              
|                                              
|FDIC and state assessments                     |  |                                  | 979    |      |  |            | 1,613  |   |  |          | (634   | )
|                                              
|                                              
|                                              
|                                              
|Telephone expense                              |  |                                  | 1,459  |      |  |            | 1,760  |   |  |          | (301   | )
|                                              
|                                              
|                                              
|                                              
|Postage and supplies                           |  |                                  | 2,879  |      |  |            | 4,102  |   |  |          | (1,223 | )
|                                              
|                                              
|                                              
|                                              
|Legal and professional                         |  |                                  | 1,892  |      |  |            | 2,292  |   |  |          | (400   | )
|                                              
|                                              
|                                              
|                                              
|Other operating expense                        |  |                                  | 9,255  |      |  |            | 11,063 |   |  |          | (1,808 | )
|                                               |  |                                  |        |      |  |            |        |   |  |          |        |  
|Total operating expenses                       |  |                                  | 75,525 |      |  |            | 84,430 |   |  |          | (8,905 | )
|                                              
|                                              
|                                              
|                                              
|ORE (income) expense, net of ORE income        |  |                                  | 422    |      |  |            | (307   | ) |  |          | 729    |  
|                                              
|                                              
|                                              
|                                              
|Provision for losses on ORE                    |  |                                  | 225    |      |  |            | 80     |   |  |          | 145    |  
|                                              
|                                              
|                                              
|                                              
|Amortization of goodwill & premium on deposits |  |                                  | 3,858  |      |  |            | 3,910  |   |  |          | (52    | )
|                                               |  |                                  |        |      |  |            |        |   |  |          |        |  
|Total noninterest expense                      |  | $                                | 80,030 |      |  | $          | 88,113 |   |  | $        | (8,083 | )
|                                               |  |                                  |        |      |  |            |        |   |  |          |        |  

Years Ended December 31, 1999 and 1998

Comparison of Balance Sheets at December 31, 1999 and 1998

Overview

Total assets were $2.6 billion at December 31, 1999 and $2.5 billion at
December 31, 1998, an increase of $60.9 million or 2.4%. The mix of our asset
base changed substantially during the year as we sold a major part of our
December 1998 inventory of loans held for sale and reinvested those funds into
U.S. Treasury and mortgage-backed securities. At December 31, 1999, we no
longer maintained an inventory of loans held for sale.

Investment, Mortgage-Backed and Mortgage Related Securities

Investments consisting of U.S. Treasury and federal agency securities,
commercial papers, and mortgage-backed securities were $453.0 million in 1999
compared to $129.8 million in 1998, an increase of $323.2 million or 249.1%,
partially as a result of the sale or securitization of loans held for sale. At
December 31, 1999, $380.7 million of securities were classified as available
for sale, $33.1 million were classified as held to maturity and $39.2 million
were trading assets. Included in the trading asset category were: (1) a $10.9
million subordinate tranche of securities purchased from our securitization of
High LTV Loans in June 1988; (2) $24.1 million in overcollateralization and
residual interests in cash flows from securitizations in December 1997 and June
1998; and (3) the excess spread on mortgage servicing rights, which amounted to
$4.2 million at year-end 1999.

Loans

Total loans were $1.9 billion at December 31, 1999, compared to $2.1 billion
for the same period in 1998, a decrease of $190.6 million or 9.2%. Loan sales
in early 1999 and a rapid increase in refinancing of loans beginning in
mid-1999 were the primary reasons for a $231.0 million decline in first lien
residential loans. Other changes in real estate-secured loans included; (1) a
decline of $20.0 million in High LTV Loans; (2) an increase of $60.3 million of
commercial real estate, multifamily and construction loans; and (3) a $13.9
million increase in home equity loans with loan-to-value ratios of less than
100%.

34



---



Allowance for Loan Losses

The allowance for loan losses amounted to $28.2 million at December 31, 1999,
compared with $28.1 million at December 31, 1998. At December 31, 1999, the
allowance for loan losses included $26.6 million allocated to loans originated
by us and $1.6 million from discount allocations for purchased loans. During
1999, we took a charge of $9.9 million of provisions for loan losses. Other
activity included $9.6 million of loan charge-offs (net of recoveries),
$275,000 in acquired reserves, and $470,000 reallocated from the allowance to
loan discount. At December 31, 1999, the ratio of the allowance for loan
losses to nonperforming loans was 112.04% compared to 76.25% at the end of
1998.

Nonperforming Assets

Nonperforming assets amounted to $31.2 million, or 1.22% of total assets, at
December 31, 1999, compared with $42.8 million, or 1.71% of total assets, at
December 31, 1998. Nonperforming loans totaled $25.2 million (or 1.33% of
total loans) at the end of 1999, a decrease of $11.7 million from the prior
year-end. Nonperforming one-to-four family residential mortgage loans
decreased by $5.1 million, while nonperforming commercial real estate and
multifamily loans declined $8.1 million. ORE increased $381,000 from $5.0
million at December 31, 1998 to $5.3 million at December 31, 1999.

Deposits

Total deposits were $2.3 billion at December 31, 1999, compared with $2.2
billion at the prior year-end, an increase of $95.4 million or 4.4%. The new
branch openings contributed $206.2 million in deposit growth since the
beginning of the year. Overall, since year-end 1998, certificates of deposit
and money market gold accounts increased $113.8 million and $59.7 million,
respectively. Checking, regular money market and savings accounts declined by
$13.2 million, $8.0 million and $56.8 million, respectively.

Senior Debt

On September 24, 1998, SunTrust extended us a non-revolving line of credit for
up to $25.0 million. On September 25, 1998, we received the full $25.0 million
balance under the line of credit. The proceeds of the Senior Debt were used to
maintain the regulatory capital of the Bank at well capitalized levels and to
support the planned branch expansion activities.

In September 1999, we paid down the principal amount of the Senior Debt by
$15.0 million to a balance of $10.0 million, using the net proceeds from the
issuance of subordinated debt and dividends from the Bank. SunTrust agreed to
extend the remaining portion of its loan to us through March 31, 2001.

Convertible Subordinated Debentures

In September 1999, we completed a private placement to accredited investors of
$15.0 million of our 7.0% convertible subordinated debentures (the
Debentures). The net proceeds from issuance were used to paydown the Senior
Debt. Each $1,000 principal amount of the Debentures are convertible at any
time by the holder into 55.55556 shares of our common stock. The resulting
conversion price of $18.00 per share represented a premium of approximately 22%
over the $14.75 September 22, 1999 closing price of our common stock on the
NASDAQ National Market. The Debentures are redeemable by us at any time after
October 1, 2004 at a premium of 106% with the premium declining one percent per
year thereafter. The Debentures may also be redeemed at our option if the
closing price of our common stock equals or exceeds $23.40 for 20 consecutive
trading days. The Debentures carry an effective rate to maturity of 7.23%.

Term Subordinated Debt and Unsecured Debt

On December 30, 1998, our directors executed unsecured notes with an aggregate
balance of $7.0 million to further augment our regulatory capital. The loan
proceeds were used to cover our debt servicing obligations.

In September 1999, we refinanced the $7.0 million of debt to our directors.
Approximately $4.3 million of the Debentures were issued to our directors in
exchange for an equal amount of the pre-existing debt. The $2.7 million
balance of the $7.0 million debt to the directors not converted into the
Debentures was exchanged for an equal principal amount of non-convertible term
subordinated debt (the Term Debt). Both the Debentures and the Term Debt
issued by us qualify as tier 2 capital under applicable regulatory capital
guidelines.

35



---



Stockholders Equity

Stockholders equity was $170.2 million at December 31, 1999, or 6.6% of total
assets, compared to $163.6 million, or 6.5% of total assets, at December 31,
1998. At December 31, 1999, the Banks tier 1 (Leverage) capital ratio was
6.78%, its tier 1 risk-based capital ratio was 10.33%, and its total risk
based capital ratio was 11.63% all in excess of minimum FDIC guidelines for an
institution to be considered a well-capitalized bank, while the same ratios
for the Company were 6.02%, 9.17% and 11.53%.

Comparison of Results of Operations for Years Ended December 31, 1999 and 1998

Overview

A net profit of $10.7 million, or $.95 per share (on a diluted basis), was
recorded for the year ended December 31, 1999 compared to a net loss of $12.4
million, or $1.34 per share, for the same period in 1998. Return on average
assets for the year ended December 31, 1999, was 0.42%, compared to a negative
0.58% for the same period in 1998. The return on average equity was 6.39%,
compared with a negative 7.91% for the same period in 1998. Results for 1998
were negatively impacted by a restructuring charge of $6.7 million, $818,000 in
other costs associated with legal and other issues and $10.0 million in loss
provisions for loans transferred to portfolio at year-end 1998.

Analysis of Net Interest Income (see table on page 37)

Net interest income for 1999 was $92.4 million compared to $83.2 million for
1998. This $9.2 million or 11.1% increase was primarily due to growth in total
interest earning assets. Average asset yield decreased 47 basis points from
8.57% for 1998 to 8.10% for 1999 primarily from increased investment in
mortgage securities and a reduced investment in loans held for sale.
Average-earning assets increased $341.5 million from $2.0 billion for the
year-ended December 31, 1998, to $2.4 billion for the same period in 1999. The
average cost of interest bearing liabilities decreased 33 basis points from
4.86% to 4.53%. Net interest spread, the difference between asset yield and
cost of funds, decreased 14 basis points to 3.57%. Net interest margin, which
includes the benefit of noninterest bearing funds, decreased from 4.12% for
1998 to 3.92% for 1999.

Noninterest Income

Noninterest income for 1999 was $25.8 million compared with $56.2 million for
1998, a decrease of $30.3 million. This decrease is primarily the result of
lower gains on sale of loans from the now-discontinued mortgage banking
division.

The following table reflects the components of noninterest income for the years
ended December 31, 1999 and 1998 ($ in thousands):

|                                        |  |                    |        |      |  |            |        |  |  |          |         |  
|--------------------------------------- |  | ------------------ | ------ | ---- |  | ---------- | ------ |  |  | -------- | ------- | -
|                                        |  | For the Years     
|                                        |  | Ended December 31,
|                                        |  |                   
|                                        |  |                    |        |      |  |            |        |  |  | Increase
|                                        |  | 1999               |        | 1998 |  | (Decrease)
|                                        |  |                    |        |      |  |           
|Income from mortgage banking operations |  | $                  |       |      |  | $          | 40,600 |  |  | $        | (40,600 | )
|                                       
|                                       
|                                       
|                                       
|Service charges on deposit accounts     |  |                    | 6,833  |      |  |            | 5,442  |  |  |          | 1,391   |  
|                                       
|                                       
|                                       
|                                       
|Loan service fees                       |  |                    | 6,584  |      |  |            | 692    |  |  |          | 5,892   |  
|                                       
|                                       
|                                       
|                                       
|Other loan fee income                   |  |                    | 4,281  |      |  |            | 2,486  |  |  |          | 1,795   |  
|                                       
|                                       
|                                       
|                                       
|Gain on sale of loans, net              |  |                    | 3,602  |      |  |            | 2,890  |  |  |          | 712     |  
|                                       
|                                       
|                                       
|                                       
|Gain on sale of securities, net         |  |                    |       |      |  |            | 867    |  |  |          | (867    | )
|                                       
|                                       
|                                       
|                                       
|Net trading account profit (loss)       |  |                    | (714   | )    |  |            | 173    |  |  |          | (887    | )
|                                       
|                                       
|                                       
|                                       
|Merchant charge card processing fees    |  |                    | 569    |      |  |            | 466    |  |  |          | 103     |  
|                                       
|                                       
|                                       
|                                       
|Gain on sale of branches                |  |                    | 1,098  |      |  |            |       |  |  |          | 1,098   |  
|                                       
|                                       
|                                       
|                                       
|Gain on branch relocations              |  |                    | 1,289  |      |  |            |       |  |  |          | 1,289   |  
|                                       
|                                       
|                                       
|                                       
|Foreign exchange income                 |  |                    | 96     |      |  |            | 111    |  |  |          | (15     | )
|                                       
|                                       
|                                       
|                                       
|Other income                            |  |                    | 2,194  |      |  |            | 2,430  |  |  |          | (236    | )
|                                        |  |                    |        |      |  |            |        |  |  |          |         |  
|Total noninterest income                |  | $                  | 25,832 |      |  | $          | 56,157 |  |  | $        | (30,325 | )
|                                        |  |                    |        |      |  |            |        |  |  |          |         |  

36



---



The following table summarizes the average yields earned on interest earning
assets and the average rates paid on interest bearing liabilities for the years
ended December 31, 1999 and 1998 ($ in thousands):

|                                        |                                    |   |           |           |          |   |         |         |         |  |          |      |      |   |           |           |         |   |         |         |  |  |      |      |  
|--------------------------------------- | ---------------------------------- | - | --------- | --------- | -------- | - | ------- | ------- | ------- |  | -------- | ---- | ---- | - | --------- | --------- | ------- | - | ------- | ------- |  |  | ---- | ---- | -
|                                        |                                    |   | 1999      |           | 1998    
|                                        |                                    |   |           |           |         
|                                        |                                    |   | Average   |           |          |   |         |         | Average |  | Average  |      |      |   |           |           | Average
|                                        |                                    |   | Balance   |           | Interest |   | Rate    |         | Balance |  | Interest |      | Rate
|                                        |                                    |   |           |           |          |   |         |         |         |  |          |      |     
|Summary of Average Rates               
|                                       
|                                       
|                                       
|                                       
|Interest earning assets:               
|                                       
|                                       
|                                       
|                                       
|                                        | Loans net                          |   | $         | 1,916,399 |          |   | $       | 166,656 |         |  |          | 8.70 | %    |   | $         | 1,773,697 |         |   | $       | 159,495 |  |  |      | 8.97 | %
|                                       
|                                       
|                                       
|                                       
|                                        | Investment securities              |   |           | 39,501    |          |   |         | 2,075   |         |  |          | 5.25 |      |   |           | 38,430    |         |   |         | 2,364   |  |  |      | 6.15 |  
|                                       
|                                       
|                                       
|                                       
|                                        | Mortgage backed securities         |   |           | 207,587   |          |   |         | 12,840  |         |  |          | 6.19 |      |   |           | 23,171    |         |   |         | 1,669   |  |  |      | 7.20 |  
|                                       
|                                       
|                                       
|                                       
|                                        | Trading securities                 |   |           | 57,058    |          |   |         | 2,224   |         |  |          | 3.90 |      |   |           | 56,160    |         |   |         | 2,859   |  |  |      | 5.09 |  
|                                       
|                                       
|                                       
|                                       
|                                        | Interest bearing deposits in banks |   |           | 8,595     |          |   |         | 424     |         |  |          | 4.93 |      |   |           | 2,655     |         |   |         | 128     |  |  |      | 4.81 |  
|                                       
|                                       
|                                       
|                                       
|                                        | FHLB stock                         |   |           | 13,287    |          |   |         | 991     |         |  |          | 7.46 |      |   |           | 11,337    |         |   |         | 843     |  |  |      | 7.44 |  
|                                       
|                                       
|                                       
|                                       
|                                        | Federal funds sold                 |   |           | 104,527   |          |   |         | 5,206   |         |  |          | 4.91 |      |   |           | 105,783   |         |   |         | 5,435   |  |  |      | 5.07 |  
|                                       
|                                       
|                                       
|                                       
|                                        | Commercial paper                   |   |           | 5,808     |          |   |         | 347     |         |  |          | 5.89 |      |   |           |          |         |   |         |        |  |  |      |     |  
|                                        |                                    |   |           |           |          |   |         |         |         |  |          |      |      |   |           |           |         |   |         |        
|Total interest earning assets           |                                    |   | 2,352,762 |           |          |   | 190,763 |         |         |  | 8.10     |      |      |   | 2,011,233 |           |         |   | 172,793 |         |  |  | 8.57 |     
|                                       
|                                       
|                                       
|                                       
|                                        | Noninterest earning assets         |   |           | 165,995   |          |   |         |         |         |  |          |      |      |   |           | 138,353   |        
|                                        |                                    |   |           |           |          |   |         |         |         |  |          |      |      |   |           |          
|                                        | Total assets                       |   | $         | 2,518,757 |          |   |         |         |         |  |          |      |      |   | $         | 2,149,586 |        
|                                        |                                    |   |           |           |          |   |         |         |         |  |          |      |      |   |           |          
|Interest bearing liabilities:          
|                                       
|                                       
|                                       
|                                       
|                                        | Interest checking                  |   | $         | 177,592   |          |   | $       | 1,419   |         |  |          | 0.80 | %    |   | $         | 151,460   |         |   | $       | 2,201   |  |  |      | 1.45 | %
|                                       
|                                       
|                                       
|                                       
|                                        | Money market                       |   |           | 200,550   |          |   |         | 7,481   |         |  |          | 3.73 |      |   |           | 101,683   |         |   |         | 2,743   |  |  |      | 2.70 |  
|                                       
|                                       
|                                       
|                                       
|                                        | Savings                            |   |           | 68,69     |          |   |         | 31,143  |         |  |          | 1.66 |      |   |           | 64,757    |         |   |         | 1,394   |  |  |      | 2.15 |  
|                                       
|                                       
|                                       
|                                       
|                                        | Passbook gold                      |   |           | 278,562   |          |   |         | 11,604  |         |  |          | 4.17 |      |   |           | 270,045   |         |   |         | 12,904  |  |  |      | 4.78 |  
|                                       
|                                       
|                                       
|                                       
|                                        | Time deposits                      |   |           | 1,371,047 |          |   |         | 72,486  |         |  |          | 5.29 |      |   |           | 1,106,167 |         |   |         | 61,916  |  |  |      | 5.60 |  
|                                       
|                                       
|                                       
|                                       
|                                        | FHLB advances                      |   |           | 3,230     |          |   |         | 164     |         |  |          | 5.06 |      |   |           | 104,894   |         |   |         | 6,103   |  |  |      | 5.82 |  
|                                       
|                                       
|                                       
|                                       
|                                        | Other borrowings                   |   |           | 70,642    |          |   |         | 4,083   |         |  |          | 5.78 |      |   |           | 43,976    |         |   |         | 2,348   |  |  |      | 5.34 |  
|                                        |                                    |   |           |           |          |   |         |         |         |  |          |      |      |   |           |           |         |   |         |        
|Total interest bearing liabilities      |                                    |   | 2,170,316 |           |          |   | 98,380  |         |         |  | 4.53     |      |      |   | 1,842,982 |           |         |   | 89,609  |         |  |  | 4.86 |     
|                                       
|                                       
|                                       
|                                       
|                                        | Noninterest bearing liabilities    |   |           | 180,860   |          |   |         |         |         |  |          |      |      |   |           | 153,164   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Stockholders equity               |   |           | 167,581   |          |   |         |         |         |  |          |      |      |   |           | 153,440   |        
|                                        |                                    |   |           |           |          |   |         |         |         |  |          |      |      |   |           |          
|Total liabilities and equity            |                                    | $ | 2,518,757 |           |          |   |         |         |         |  |          |      |      | $ | 2,149,586 |          
|                                        |                                    |   |           |           |          |   |         |         |         |  |          |      |      |   |           |          
|Net interest income/net interest spread |                                    |   |           |           |          | $ | 92,383  |         |         |  | 3.57     | %    |      |   |           |           |         | $ | 83,184  |         |  |  | 3.71 | %   
|                                        |                                    |   |           |           |          |   |         |         |         |  |          |      |      |   |           |           |         |   |         |         |  |  |      |     
|Net interest margin                     |                                    |   |           |           |          |   |         |         |         |  | 3.92     | %    |      |   |           |           |         |   |         |         |  |  | 4.12 | %   
|                                        |                                    |   |           |           |          |   |         |         |         |  |          |      |      |   |           |           |         |   |         |         |  |  |      |     

|                                |                                    |        |                            |        |   |       |       |        |   |   |       |        |  
|------------------------------- | ---------------------------------- | ------ | -------------------------- | ------ | - | ----- | ----- | ------ | - | - | ----- | ------ | -
|                                |                                    |        | Increase (Decrease) Due to
|                                |                                    |        |                           
|Changes in Net Interest Income  |                                    | Volume |                            | Rate   |   | Total
|                                |                                    |        |                            |        |   |      
|Interest earning assets:       
|                               
|                               
|                               
|                               
|                                | Loans, net                         |        | $                          | 10,297 |   |       | $     | (3,136 | ) |   | $     | 7,161  |  
|                               
|                               
|                               
|                               
|                                | Investment securities              |        |                            | 285    |   |       |       | (574   | ) |   |       | (289   | )
|                               
|                               
|                               
|                               
|                                | Mortgage backed securities         |        |                            | 11,409 |   |       |       | (238   | ) |   |       | 11,171 |  
|                               
|                               
|                               
|                               
|                                | Trading securities                 |        |                            | 378    |   |       |       | (1,013 | ) |   |       | (635   | )
|                               
|                               
|                               
|                               
|                                | Interest bearing deposits in banks |        |                            | 254    |   |       |       | 42     |   |   |       | 296    |  
|                               
|                               
|                               
|                               
|                                | FHLB stock                         |        |                            | 145    |   |       |       | 3      |   |   |       | 148    |  
|                               
|                               
|                               
|                               
|                                | Federal funds sold                 |        |                            | (64    | ) |       |       | (165   | ) |   |       | (229   | )
|                               
|                               
|                               
|                               
|                                | Commercial paper                   |        |                            | 347    |   |       |       |       |   |   |       | 347    |  
|                                |                                    |        |                            |        |   |       |       |        |   |   |       |        |  
|                                | Total change in interest income    |        |                            | 23,051 |   |       |       | (5,081 | ) |   |       | 17,970 |  
|                               
|                               
|                               
|                               
|                                | Interest bearing liabilities:     
|                               
|                               
|                               
|                               
|                                | Interest checking                  |        |                            | 332    |   |       |       | (1,114 | ) |   |       | (782   | )
|                               
|                               
|                               
|                               
|                                | Money market                       |        |                            | 3,399  |   |       |       | 1,339  |   |   |       | 4,738  |  
|                               
|                               
|                               
|                               
|                                | Savings                            |        |                            | 80     |   |       |       | (331   | ) |   |       | (251   | )
|                               
|                               
|                               
|                               
|                                | Passbook gold                      |        |                            | 397    |   |       |       | (1,697 | ) |   |       | (1,300 | )
|                               
|                               
|                               
|                               
|                                | Time deposits                      |        |                            | 15,261 |   |       |       | (4,691 | ) |   |       | 10,570 |  
|                               
|                               
|                               
|                               
|                                | FHLB advances                      |        |                            | (3,807 | ) |       |       | (2,132 | ) |   |       | (5,939 | )
|                               
|                               
|                               
|                               
|                                | Other borrowings                   |        |                            | 1,947  |   |       |       | (212   | ) |   |       | 1,735  |  
|                                |                                    |        |                            |        |   |       |       |        |   |   |       |        |  
|                                | Total change in interest expense   |        |                            | 17,609 |   |       |       | (8,838 | ) |   |       | 8,771  |  
|                                |                                    |        |                            |        |   |       |       |        |   |   |       |        |  
|Increase in net interest income |                                    | $      | 5,442                      |        |   | $     | 3,757 |        |   | $ | 9,199 |       
|                                |                                    |        |                            |        |   |       |       |        |   |   |       |        |  

37



---



Noninterest Expense

Total noninterest expenses for 1999 were $88.1 million compared with $142.4
million for the same period in 1998, a decrease of $54.3 million. Operating
expenses for 1999, included in the noninterest expense total, were $84.4
million compared with $129.0 million, a decrease of $44.6 million. These
decreases were primarily the result of the discontinuance of mortgage banking
operations, which accounted for a $50.9 million expense reduction. Also
included in 1999, our branch expansion program contributed $8.6 million to the
operating expense total. Merger and acquisition expenses, primarily employee
severance benefits, were $0 for 1999 compared to $3.2 million in 1998.

The following table reflects the components of noninterest expense for the
years ended December 31, 1999 and 1998 ($ in thousands):

|                                               |  |   |                    |   |      |   |            |   |  |   |          |   | 
|---------------------------------------------- |  | - | ------------------ | - | ---- | - | ---------- | - |  | - | -------- | - | 
|                                               |  |   | For the Years     
|                                               |  |   | Ended December 31,
|                                               |  |   |                   
|                                               |  |   |                    |   |      |   |            |   |  |   | Increase
|                                               |  |   | 1999               |   | 1998 |   | (Decrease)
|                                               |  |   |                    |   |      |   |           
|Salaries and benefits                          |  | $ | 41,716             |   |      | $ | 53,257     |   |  | $ | (11,541  | )
|                                              
|                                              
|                                              
|                                              
|Net occupancy expense                          |  |   | 15,957             |   |      |   | 13,623     |   |  |   | 2,334    |  
|                                              
|                                              
|                                              
|                                              
|Advertising and marketing                      |  |   | 1,103              |   |      |   | 18,776     |   |  |   | (17,673  | )
|                                              
|                                              
|                                              
|                                              
|Data processing fees and services              |  |   | 4,823              |   |      |   | 3,743      |   |  |   | 1,080    |  
|                                              
|                                              
|                                              
|                                              
|FDIC and state assessments                     |  |   | 1,613              |   |      |   | 1,190      |   |  |   | 423      |  
|                                              
|                                              
|                                              
|                                              
|Telephone expense                              |  |   | 1,760              |   |      |   | 2,693      |   |  |   | (933     | )
|                                              
|                                              
|                                              
|                                              
|Postage and supplies                           |  |   | 4,102              |   |      |   | 20,813     |   |  |   | (16,711  | )
|                                              
|                                              
|                                              
|                                              
|Legal and professional                         |  |   | 2,292              |   |      |   | 4,348      |   |  |   | (2,056   | )
|                                              
|                                              
|                                              
|                                              
|Other operating expense                        |  |   | 11,064             |   |      |   | 10,574     |   |  |   | 490      |  
|                                               |  |   |                    |   |      |   |            |   |  |   |          |   | 
|Total operating expenses                       |  |   | 84,430             |   |      |   | 129,017    |   |  |   | (44,587  | )
|                                              
|                                              
|                                              
|                                              
|Merger and acquisition expenses                |  |   |                   |   |      |   | 3,233      |   |  |   | (3,233   | )
|                                              
|                                              
|                                              
|                                              
|Restructuring cost                             |  |   |                   |   |      |   | 6,673      |   |  |   | (6,673   | )
|                                              
|                                              
|                                              
|                                              
|ORE (income) expense, net of ORE income        |  |   | (307               | ) |      |   | (40        | ) |  |   | (267     | )
|                                              
|                                              
|                                              
|                                              
|Provision for losses on ORE                    |  |   | 80                 |   |      |   | 1,603      |   |  |   | (1,523   | )
|                                              
|                                              
|                                              
|                                              
|Amortization of goodwill & premium on deposits |  |   | 3,910              |   |      |   | 1,930      |   |  |   | 1,980    |  
|                                               |  |   |                    |   |      |   |            |   |  |   |          |   | 
|Total noninterest expense                      |  | $ | 88,113             |   |      | $ | 142,416    |   |  | $ | (54,303  | )
|                                               |  |   |                    |   |      |   |            |   |  |   |          |   | 

[Balance of page intentionally left blank]

38



---



Selected Quarterly Financial Data

Summarized selected unaudited quarterly financial information for the years
ended December 31, 2000 and 1999 follows ($ in thousands except share data):

|                                  |  |         |        |         |  |         |        |         |  |   |        |  |  |   |        |  
|--------------------------------- |  | ------- | ------ | ------- |  | ------- | ------ | ------- |  | - | ------ |  |  | - | ------ | -
|                                  |  | 2000   
|                                  |  |        
|                                  |  | First   |        | Second  |  | Third   |        | Fourth 
|                                  |  | Quarter |        | Quarter |  | Quarter |        | Quarter
|                                  |  |         |        |         |  |         |        |        
|Interest income                   |  | $       | 49,587 |         |  | $       | 50,846 |         |  | $ | 49,163 |  |  | $ | 47,605 |  
|                                 
|                                 
|                                 
|                                 
|Interest expense                  |  |         | 25,915 |         |  |         | 26,836 |         |  |   | 27,217 |  |  |   | 27,509 |  
|                                  |  |         |        |         |  |         |        |         |  |   |        |  |  |   |        |  
|Net interest income               |  | $       | 23,672 |         |  | $       | 24,010 |         |  | $ | 21,946 |  |  | $ | 20,096 |  
|                                  |  |         |        |         |  |         |        |         |  |   |        |  |  |   |        |  
|Net income (loss)                 |  | $       | 1,649  |         |  | $       | 1,687  |         |  | $ | 1,516  |  |  | $ | (9,449 | )
|                                  |  |         |        |         |  |         |        |         |  |   |        |  |  |   |        |  
|Earnings (loss) per share-basic   |  | $       | .15    |         |  | $       | .15    |         |  | $ | .14    |  |  | $ | (.90   | )
|                                  |  |         |        |         |  |         |        |         |  |   |        |  |  |   |        |  
|Earnings (loss) per share-diluted |  | $       | .15    |         |  | $       | .15    |         |  | $ | .13    |  |  | $ | (.90   | )
|                                  |  |         |        |         |  |         |        |         |  |   |        |  |  |   |        |  

|                           |  |         |        |         |  |         |        |         |  |   |        |  |  |   |        | 
|-------------------------- |  | ------- | ------ | ------- |  | ------- | ------ | ------- |  | - | ------ |  |  | - | ------ | 
|                           |  | 1999   
|                           |  |        
|                           |  | First   |        | Second  |  | Third   |        | Fourth 
|                           |  | Quarter |        | Quarter |  | Quarter |        | Quarter
|                           |  |         |        |         |  |         |        |        
|Interest income            |  | $       | 46,679 |         |  | $       | 46,965 |         |  | $ | 48,158 |  |  | $ | 48,961 | 
|                          
|                          
|                          
|                          
|Interest expense           |  |         | 24,256 |         |  |         | 24,202 |         |  |   | 24,795 |  |  |   | 25,128 | 
|                           |  |         |        |         |  |         |        |         |  |   |        |  |  |   |        | 
|Net interest income        |  | $       | 22,423 |         |  | $       | 22,763 |         |  | $ | 23,363 |  |  | $ | 23,833 | 
|                           |  |         |        |         |  |         |        |         |  |   |        |  |  |   |        | 
|Net income                 |  | $       | 2,855  |         |  | $       | 2,988  |         |  | $ | 3,063  |  |  | $ | 1,786  | 
|                           |  |         |        |         |  |         |        |         |  |   |        |  |  |   |        | 
|Earnings per share-basic   |  | $       | .27    |         |  | $       | .28    |         |  | $ | .28    |  |  | $ | .16    | 
|                           |  |         |        |         |  |         |        |         |  |   |        |  |  |   |        | 
|Earnings per share-diluted |  | $       | .25    |         |  | $       | .26    |         |  | $ | .27    |  |  | $ | .16    | 
|                           |  |         |        |         |  |         |        |         |  |   |        |  |  |   |        | 

Asset/Liability Management and Liquidity

Liquidity

The Asset/Liability Management Committee (ALCO) reviews our liquidity, which
is our ability to generate sufficient cash flow to meet the funding needs of
current loan demand, deposit withdrawals and other cash demands. The primary
sources of funds consist of deposits, amortization and prepayments of loans,
sales and maturities of investments, other funds from operations and our
capital. We are a member of the FHLB and have the ability to borrow to
supplement our liquidity needs with our borrowing capacity equal to 20% of our
total assets. The Bank also maintains borrowing lines of credit using its
investment portfolio as collateral.

Those FHLB borrowings, known as advances, are secured by the Banks mortgage
loan portfolio, and the terms and rates charged for FHLB advances vary based on
an institutions loan portfolio and in response to general economic conditions.
As a shareholder of the FHLB, the Bank is authorized to apply for advances
from this bank. A variety of borrowing plans is offered by the FHLB, each with
its own maturity and interest rate. The FHLB will consider various factors,
including an institutions regulatory capital position, net income, quality and
composition of assets, lending policies and practices, and level of current
borrowings from all sources, in determining the amount of credit to extend to
an institution. As of December 31, 2000, the Bank had $761,000 of outstanding
advances from the FHLB. (See Item 1. Business Supervision and Regulation -
Federal Home Loan Bank System and Liquidity).

At December 31, 2000, the Banks liquidity ratio, defined as net cash and
investments of $578.5 million divided by net deposits and short-term
liabilities of $2.2 billion, was 26.86% as compared to 22.81% at

39



---



December 31,
1999. Net liquid assets were $395.7 million in excess of the amount required
by Florida banking regulations.

Asset/Liability Management

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 that
delegate to ALCO 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 all pricing strategies.

The management of interest-rate risk is one of the most significant factors
affecting the ability to achieve future earnings. The measure of the mismatch
of assets maturing or re-pricing within certain periods, and liabilities
maturing or re-pricing within the same period, is commonly referred to as the
gap for such period. Controlling the maturity or re-pricing of an
institutions assets and liabilities in order to minimize interest rate risk is
commonly referred to as gap management. Negative gap occurs when, during a
specific time period, more of an institutions liabilities are scheduled to
re-price than its assets, so that, barring other factors affecting interest
income and expense, in periods of rising interest rates the institutions
interest expense would increase more rapidly than its interest income, and in
periods of falling interest rates the institutions interest expense would
decrease more rapidly than its interest income. Positive gap occurs when
more of an institutions assets are scheduled to re-price than its liabilities,
so that, barring other factors affecting interest income and expense, in
periods of falling interest rates the institutions interest income would
decrease more rapidly than its interest expense, and in periods of rising
interest rates the institutions interest income would increase more rapidly
than its interest expense. It is common to focus on the one-year gap, which is
the difference between the dollar amount of assets and the dollar amount of
liabilities maturing or re-pricing within the next 12 months. We also focus on
the effect of rapid changes in market interest rates on net interest income and
the market values of interest-earning assets and interest-bearing liabilities.
These measures, called rate shocks, help us evaluate the sensitivity to
interest rate changes.

ALCO uses an industry standard computer modeling system to analyze the impact
of financial strategies prior to their implementation. The system attempts to
simulate the asset and liability base and project future operating results
under a variety of interest rates and spread assumptions. Through this
management tool, we can also, among other things, project the effects of
changing our asset and liability mix and modifying our balance sheet, and
identify appropriate investment opportunities. The results of these
simulations are evaluated within the context of the interest-rate risk policy,
which sets our target levels for the appropriate level of interest-rate risk.

The policy is to maintain a cumulative one-year gap of no more than plus or
minus 15% of total assets and to limit the change in net interest income over a
one-year time horizon to no more than 15% of base net interest income, assuming
an immediate 200 basis point change in market interest rates. We conform to
this policy primarily by managing the maturity distribution of our investment
portfolio and emphasizing loan originations and loan purchases carrying
variable interest rates tied to interest-sensitive indices. Additionally, the
Bank has joined the FHLB to enhance its liquidity position and to provide it
with the ability to utilize long-term fixed-rate advances to improve the match
between interest earning assets and interest bearing liabilities in certain
periods. Currently, off-balance-sheet hedging instruments are not used to
manage overall interest rate risk. In 1999, we discontinued the use of these
instruments. We may expand our use of off-balance sheet hedging instruments to
manage exposure to overall interest rate risk in the future, subject to board
approval.

The cumulative one-year gap at December 31, 2000, was a negative $71.4 million,
or a negative 2.92% (expressed as a percentage of total assets). Our net
interest income sensitivity, assuming an immediate change in market interest
rates of plus or minus 200 basis points, was a change of positive 0.86% for
plus 200 basis points and negative 9.35% for minus 200 basis points.

40



---



The following table presents the maturities or re-pricing of interest earning
assets and interest bearing liabilities at December 31, 2000. The balances
shown have been derived based on the financial characteristics of the various
assets and liabilities. Adjustable and floating-rate assets are included in the
period in which interest rates are next scheduled to adjust rather than their
scheduled maturity dates. Fixed-rate loans are shown in the periods in which
they are scheduled to be repaid according to contractual amortization and,
where appropriate, prepayment assumptions, based on the coupon rates in the
portfolio have been used to adjust the repayment amounts. Re-pricing of time
deposits is based on their scheduled maturities. Based on an analysis of our
deposit accounts and our experience in the markets in which we operate,
statement savings deposits are assumed to re-price at 16.2% of the total
balance in the first year, 11.6% in the second year, 10.8% in the third year,
7.6% in the fourth year, and the remaining 53.8% in the fifth year. Passbook
savings deposits are assumed to re-price at 40.0% of the total balance in the
first year, 20.0% in the second year, 20.0% in the third year, and the
remaining 20.0% in the fourth year. Re-pricing of interest checking is assumed
to occur at 11.04% in the first year, 6.5% in the second year, 7.4% in the
third year, 6.6% in the fourth year, and the remaining 68.44% in the fifth
year. The re-pricing of regular money market accounts is assumed at 22.3% of
the total balance in the first year, 11.9% in the second year, 8.2% in the
third year, 7.4% in the fourth year with the remaining 50.0% in the fifth year,
while money market gold accounts re-price at 50.0% in the first year, 35.0% in
the second year, 10.0% in the third year with the remaining 5.0% in the fourth
year.

[Balance of page intentionally left blank]

41



---



INTEREST SENSITIVITY ANALYSIS

December 31, 2000
($ in thousands)

|                                                                                                                         |                   |   |            |         |             |  |        |      |      |   |          |         |        |  |       |      |  
|------------------------------------------------------------------------------------------------------------------------ | ----------------- | - | ---------- | ------- | ----------- |  | ------ | ---- | ---- | - | -------- | ------- | ------ |  | ----- | ---- | -
|                                                                                                                         |                   |   | 0-3 months |         | 4-12 months
|                                                                                                                         |                   |   |            |         |            
|                                                                                                                         |                   |   |            |         |             |  | Yield/ |      |      |   |          |         | Yield/
|                                                                                                                         |                   |   | Amount     |         | Rate        |  | Amount |      | Rate
|                                                                                                                         |                   |   |            |         |             |  |        |      |     
|Interest earning assets:                                                                                                
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|U.S. Treasury securities
and government agencies                                                                         |                   | $ | 9,998      |         |             |  | 4.67   | %    |      | $ |         |         |        |  | 0.00  | %   
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Revenue bonds                                                                                                            |                   |   |           |         |             |  | 0.00   |      |      |   | 500      |         |        |  | 8.60  |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Mortgage backed securities                                                                                               |                   |   | 64,375     |         |             |  | 6.99   |      |      |   | 82,813   |         |        |  | 6.86  |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Trading securities                                                                                                       |                   |   |           |         |             |  | 0.00   |      |      |   |         |         |        |  | 0.00  |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Residual and other                                                                                                       |                   |   | 88         |         |             |  | 0.00   |      |      |   | 1,708    |         |        |  | 0.00  |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Federal funds sold                                                                                                       |                   |   | 150,212    |         |             |  | 5.90   |      |      |   |         |         |        |  | 0.00  |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Interest bearing deposits
in banks                                                                                       |                   |   | 6,910      |         |             |  | 6.37   |      |      |   |         |         |        |  | 0.00  |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|FHLB stock                                                                                                               |                   |   | 13,816     |         |             |  | 7.75   |      |      |   |         |         |        |  | 0.00  |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Portfolio loans                                                                                                          |                   |   | 473,521    |         |             |  | 9.57   |      |      |   | 431,583  |         |        |  | 8.56  |     
|                                                                                                                         |                   |   |            |         |             |  |        |      |      |   |          |         |        |  |       |     
|Total interest earning
assets                                                                                            |                   | $ | 718,920    |         |             |  | 8.44   |      |      | $ | 516,604  |         |        |  | 8.23  |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Interest bearing liabilities:                                                                                           
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Deposits                                                                                                                
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                         | Interest checking |   | $          | 7,194   |             |  |        | 0.73 | %    |   | $        | 23,240  |        |  |       | 0.73 | %
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                         | Money market      |   |            | 159,957 |             |  |        | 5.17 |      |   |          | 59,930  |        |  |       | 4.20 |  
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                         | Savings           |   |            | 2,270   |             |  |        | 1.57 |      |   |          | 7,381   |        |  |       | 1.57 |  
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                         | Passbook gold     |   |            | 14,240  |             |  |        | 4.09 |      |   |          | 45,092  |        |  |       | 4.09 |  
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                         | Time deposits     |   |            | 112,093 |             |  |        | 5.51 |      |   |          | 822,664 |        |  |       | 6.19 |  
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|FHLB advances                                                                                                            |                   |   | 2          |         |             |  | 6.85   |      |      |   | 8        |         |        |  | 6.85  |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Outside borrowings                                                                                                       |                   |   | 41,581     |         |             |  | 5.35   |      |      |   |         |         |        |  | 0.00  |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Holding company debt                                                                                                     |                   |   | 13,083     |         |             |  | 9.27   |      |      |   |         |         |        |  | 0.00  |     
|                                                                                                                         |                   |   |            |         |             |  |        |      |      |   |          |         |        |  |       |     
|Total interest bearing
liabilities                                                                                       |                   | $ | 350,420    |         |             |  | 5.30   |      |      | $ | 958,315  |         |        |  | 5.81  |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Excess (deficiency) of interest-
earning assets over interest-
bearing liabilities                                       |                   | $ | 368,500    |         |             |  | 3.14   | %    |      | $ | (441,711 | )       |        |  | 2.42  | %   
|                                                                                                                         |                   |   |            |         |             |  |        |      |      |   |          |         |        |  |       |     
|Cumulative excess (deficiency)
of interest earning assets
over interest bearing
liabilities                              |                   | $ | 368,500    |         |             |  | 3.14   | %    |      | $ | (73,211  | )       |        |  | (2.69 | )%  
|                                                                                                                         |                   |   |            |         |             |  |        |      |      |   |          |         |        |  |       |     
|Cumulative excess (deficiency)
of interest earning assets
over interest bearing
liabilities as a percent
of total assets |                   |   |            |         |             |  | 15.10  | %    |      |   |          |         |        |  | (2.92 | )%  
|                                                                                                                         |                   |   |            |         |             |  |        |      |      |   |          |         |        |  |       |     

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                                                                                         |                   |   |           |         |              |  |        |      |      |   |         |     |        |  |       |      |  
|------------------------------------------------------------------------------------------------------------------------ | ----------------- | - | --------- | ------- | ------------ |  | ------ | ---- | ---- | - | ------- | --- | ------ |  | ----- | ---- | -
|                                                                                                                         |                   |   | 1-5 Years |         | Over 5 Years
|                                                                                                                         |                   |   |           |         |             
|                                                                                                                         |                   |   |           |         |              |  | Yield/ |      |      |   |         |     | Yield/
|                                                                                                                         |                   |   | Amount    |         | Rate         |  | Amount |      | Rate
|                                                                                                                         |                   |   |           |         |              |  |        |      |     
|Interest earning assets:                                                                                                
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|U.S. Treasury securities
and government agencies                                                                         |                   | $ |          |         |              |  | 0.00   | %    |      | $ | 5,003   |     |        |  | 7.87  | %   
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Revenue bonds                                                                                                            |                   |   |          |         |              |  | 0.00   |      |      |   | 3,286   |     |        |  | 7.38  |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Mortgage backed securities                                                                                               |                   |   | 73,615    |         |              |  | 6.56   |      |      |   | 142,787 |     |        |  | 6.47  |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Trading securities                                                                                                       |                   |   | 6,545     |         |              |  | 10.77  |      |      |   | 4,319   |     |        |  | 10.77 |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Residual and other                                                                                                       |                   |   | 11,919    |         |              |  | 0.00   |      |      |   |        |     |        |  | 0.00  |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Federal funds sold                                                                                                       |                   |   |          |         |              |  | 0.00   |      |      |   |        |     |        |  | 0.00  |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Interest bearing deposits
in banks                                                                                       |                   |   |          |         |              |  | 0.00   |      |      |   |        |     |        |  | 0.00  |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|FHLB stock                                                                                                               |                   |   |          |         |              |  | 0.00   |      |      |   |        |     |        |  | 0.00  |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Portfolio loans                                                                                                          |                   |   | 559,378   |         |              |  | 8.45   |      |      |   | 246,860 |     |        |  | 6.77  |     
|                                                                                                                         |                   |   |           |         |              |  |        |      |      |   |         |    
|Total interest earning
assets                                                                                            |                   | $ | 651,457   |         |              |  | 7.96   |      |      | $ | 402,255 |     |        |  | 6.97  |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Interest bearing liabilities:                                                                                           
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Deposits                                                                                                                
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                         | Interest checking |   | $         | 148,342 |              |  |        | 0.77 | %    |   | $       |    |        |  |       | 0.00 | %
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                         | Money market      |   |           | 76,030  |              |  |        | 3.76 |      |   |         |    |        |  |       | 0.00 |  
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                         | Savings           |   |           | 47,828  |              |  |        | 1.58 |      |   |         |    |        |  |       | 0.00 |  
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                         | Passbook gold     |   |           | 83,064  |              |  |        | 4.09 |      |   |         |    |        |  |       | 0.00 |  
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                         | Time deposits     |   |           | 413,614 |              |  |        | 6.41 |      |   |         | 926 |        |  |       | 5.33 |  
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|FHLB advances                                                                                                            |                   |   | 48        |         |              |  | 6.85   |      |      |   | 703     |     |        |  | 6.85  |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Outside borrowings                                                                                                       |                   |   |          |         |              |  | 0.00   |      |      |   |        |     |        |  | 0.00  |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Holding company debt                                                                                                     |                   |   |          |         |              |  | 0.00   |      |      |   | 14,712  |     |        |  | 7.23  |     
|                                                                                                                         |                   |   |           |         |              |  |        |      |      |   |         |    
|Total interest bearing
liabilities                                                                                       |                   | $ | 768,926   |         |              |  | 4.51   |      |      | $ | 16,341  |     |        |  | 7.11  |     
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|                                                                                                                        
|Excess (deficiency) of interest-
earning assets over interest-
bearing liabilities                                       |                   | $ | (117,469  | )       |              |  | 3.45   | %    |      | $ | 385,914 |     |        |  | (0.14 | )%  
|                                                                                                                         |                   |   |           |         |              |  |        |      |      |   |         |     |        |  |       |     
|Cumulative excess (deficiency)
of interest earning assets
over interest bearing
liabilities                              |                   | $ | (190,680  | )       |              |  | 2.98   | %    |      | $ | 195,234 |     |        |  | 2.75  | %   
|                                                                                                                         |                   |   |           |         |              |  |        |      |      |   |         |     |        |  |       |     
|Cumulative excess (deficiency)
of interest earning assets
over interest bearing
liabilities as a percent
of total assets |                   |   |           |         |              |  | (7.24  | )%   |      |   |         |     |        |  | 8.00  | %   
|                                                                                                                         |                   |   |           |         |              |  |        |      |      |   |         |     |        |  |       |     

42



---



Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Information required by this item is provided on pages 46 through
80 within the
consolidated financial statements and notes thereto.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

There are no such items to report.

PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Directors of the Company

The information relating to the Directors appears in our Proxy Statement for
the 2001 Annual Meeting of Stockholders under the caption Proposal
OneElection of Directors and is incorporated by reference.

Senior Executive Officers of the Company and Bank

The following list sets forth the name and age of each executive officer of the
Company or the Bank as of December 31, 2000, and all positions held by each
such officer (and the period each such position has been held), a brief account
of each such officers business experience during the past five years and
certain other information:

William R. Klich(56)  Mr. Klich has served as Director of the Bank,
President and Chief Executive Officer of the Company and the Bank since March
15, 2000. He was previously employed as Chairman and CEO of SunTrust Bank,
Gulf Coast from 1996 to March, 2000, regional corporate banking executive of
SunTrust Bank of Florida from 1993 to 1996 and President and CEO of Coast Bank,
F.S.B. from 1990 to 1993. He has more than 30 years of commercial banking
experience.

William R. Falzone(53) Mr. Falzone has served as our Treasurer since
March 1996 and Executive Vice President and Chief Financial Officer of the Bank
since February 1994. He was employed at Florida Federal Savings Bank from 1983
through 1991 where he served as Director of Financial Services. Before joining
the Company, he was a Senior Consultant for Stogniew and Associates, a
nationwide consulting firm. He has more than 25 years of banking experience
and is a certified public accountant.

E. Carl Goff(48) Executive Vice President and Commercial Real Estate
Manager, Mr. Goff joined Republic Bank in April 2000 as Senior Vice President
of Commercial Real Estate. He has over 18 years of commercial real estate
lending experience. Mr. Goff previously served Barnett and SunTrust Banks.

Jon D. Harkins(53) Mr. Harkins has served as Executive Vice President
and Corporate/Commercial Manager since September 2000. He joined us from First
Union National Bank where he served in various lending and management positions
for 25 years. Most recently, he served as Area President for Polk, Pasco and
Highland Counties in Florida.

Mauro A. Harto(40) Executive Vice President of the Bank and Residential
Lending Manager since May of this year. Mr. Harto formerly was with SunTrust
Bank in Sarasota from 1995-2000 where he served as Executive Vice
President/Residential Lending Division Manager. He has over 15 years
experience in all areas of mortgage production and mortgage operations.

Christopher M. Hunter(50) Mr. Hunter has served as our Secretary since
our inception in November 1995 and has served as Senior Vice President and
General Counsel of the Bank since March 1995. Mr. Hunter has been a member of
the Florida Bar for 18 years working primarily with financial institutions.
Mr. Hunter formerly served as Corporate Counsel for Florida Federal Savings
Bank, staff counsel with the Resolution Trust Corporation, and general partner
of Stock, Gouze & Hunter, P.A.

43



---



Timothy J. Little(40) Executive Vice President and Chief Credit Officer
since September 2000. Mr. Little was Executive Vice President and West Coast
Executive/Corporate Services for Huntington National Bank for two and one-half
years. Previously, Mr. Little held numerous management, lending and credit
administration positions with Barnett Bank for 12 years.

Rita J. Lowman(47) Executive Vice President and Retail Line of Business
Manager, has served in her present position with us since November 2000. Ms.
Lowman joined Bank of America in 1985 and held various line, administrative and
managerial positions including most recently, Consumer Executive/Senior Vice
President of Southwest Florida.

Item 11. EXECUTIVE COMPENSATION

Information required by this item appears in our Proxy Statement for the 2001
Annual Meeting of Shareholders under the captions, Executive Compensation and
Benefits and Certain Transactions, and is incorporated by reference.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information required by this item appears in the Proxy Statement for the 2001
Annual Meeting of Shareholders under the captions Principal Stockholders and
Security Ownership of Management and is hereby incorporated by reference.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information required by this item appears in the Proxy Statement for the 2001
Annual Meeting of Shareholders under caption, Certain transactions and
Compensation Committee Interlocks and Insider Participation and is hereby
incorporated by reference.

PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K



| | (a) |  | The following documents are filed as part of this report at pages 45
through 80.
| | --- |  | --------------------------------------------------------------------------------

| |    |  |                                                                                                              
| | -- |  | -------------------------------------------------------------------------------------------------------------
| | 1. |  | Financial Statements                                                                                         
|
|
|
|
| |    |  | Financial Statements of Republic Bancshares, Inc.                                                            
|
|
|
|
| |    |  | Report of Independent Certified Public Accountants                                                           
|
|
|
|
| |    |  | Consolidated Balance Sheets at December 31, 2000 and 1999                                                    
|
|
|
|
| |    |  | Consolidated Statements of Operations, Stockholders Equity, Comprehensive
Income (Loss), and Cash Flows for:
|
|
|
|
| |    |  | Years Ended December 31, 2000, 1999, and 1998                                                                
|
|
|
|
| |    |  | Notes to Consolidated Financial Statements                                                                   
|
|
|
|
| |    |  | All required schedules are included in the financial statements or related notes.                            



| | (b) |  | The following reports on Form 8-K filed during fiscal year ended
December 31, 2000, are hereby incorporated by reference.
| | --- |  | -------------------------------------------------------------------------------------------------------------------------

| |    |  |                                                                                                                                                                                                                                                                                   
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. |  | Report on Form 8-K filed with the Securities and Exchange
Commission on February 9, 2000 Announcement of net income of $10.7
million or $.95 per share on a diluted basis for year ended
December 31, 1999.                                                                       
|
|
|
|
| | 2. |  | Report on Form 8-K filed with the Securities and Exchange
Commission on March 21, 2000  Announcement of the appointment of
Mr. William R. Klich as President and Chief Executive Officer.
Separately, disclosure of operational deficiencies in the warehouse
lending department.



| | (c) |  | Exhibits:
| | --- |  | ---------

| |      |  |                                                    
| | ---- |  | ---------------------------------------------------
| | 23.0 |  | Consent of Independent Certified Public Accountants

44



---



REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To Republic Bancshares, Inc.:

We have audited the accompanying consolidated balance sheets of Republic
Bancshares, Inc. (a Florida corporation) and subsidiaries as of December 31,
2000 and 1999, and the related consolidated statements of operations,
stockholders equity, comprehensive income (loss), and cash flows for each of
the three years in the period ended December 31, 2000. These financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Republic Bancshares, Inc.
and subsidiaries as of December 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States.



| | /s/ ARTHUR ANDERSEN LLP
| | -----------------------

Tampa, Florida,
     January 23, 2001.

45



---



REPUBLIC BANCSHARES, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands, except share data)

|                                                          |                                                                                                                                                                                         |                              |                                            |         |              |           |           |         |           |           | 
|--------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------- | ------------------------------------------ | ------- | ------------ | --------- | --------- | ------- | --------- | --------- | 
|                                                          |                                                                                                                                                                                         |                              |                                            |         | December 31,
|                                                          |                                                                                                                                                                                         |                              |                                            |         |             
|                                                          |                                                                                                                                                                                         |                              |                                            |         | 2000         |           | 1999     
|                                                          |                                                                                                                                                                                         |                              |                                            |         |              |           |          
|ASSETS                                                   
|                                                         
|                                                         
|                                                         
|                                                         
|Cash and due from banks                                   |                                                                                                                                                                                         | $                            | 52,540                                     |         |              | $         | 62,643    |        
|                                                         
|                                                         
|                                                         
|                                                         
|Interest bearing deposits in banks                        |                                                                                                                                                                                         |                              | 6,910                                      |         |              |           | 3,758     |        
|                                                         
|                                                         
|                                                         
|                                                         
|Federal funds sold                                        |                                                                                                                                                                                         |                              | 150,212                                    |         |              |           | 27,060    |        
|                                                         
|                                                         
|                                                         
|                                                         
|Commercial paper available for sale                      |                                                                                                                                                                                         |                              |                                           |         |              |           | 39,888    |        
|                                                         
|                                                         
|                                                         
|                                                         
|Investment securities available for sale                 |                                                                                                                                                                                         |                              | 18,787                                     |         |              |           | 25,555    |        
|                                                         
|                                                         
|                                                         
|                                                         
|Mortgage-backed and mortgage
related securities:         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Held to maturity                                                                                                                                                                        |                              |                                            | 33,844  |              |           |           | 33,068  |          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Available for sale                                                                                                                                                                      |                              |                                            | 329,748 |              |           |           | 315,268 |          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Trading                                                                                                                                                                                 |                              |                                            | 24,578  |              |           |           | 39,229  |          
|                                                         
|                                                         
|                                                         
|                                                         
|FHLB stock                                                |                                                                                                                                                                                         |                              | 13,816                                     |         |              |           | 13,816    |        
|                                                         
|                                                         
|                                                         
|                                                         
|Loans, net of allowance for loan losses                   |                                                                                                                                                                                         |                              | 1,677,880                                  |         |              |           | 1,861,715 |        
|                                                         
|                                                         
|                                                         
|                                                         
|Premises and equipment, net                               |                                                                                                                                                                                         |                              | 47,223                                     |         |              |           | 52,574    |        
|                                                         
|                                                         
|                                                         
|                                                         
|Other real estate owned acquired through foreclosure, net |                                                                                                                                                                                         |                              | 5,729                                      |         |              |           | 5,332     |        
|                                                         
|                                                         
|                                                         
|                                                         
|Accrued interest receivable                               |                                                                                                                                                                                         |                              | 13,950                                     |         |              |           | 14,747    |        
|                                                         
|                                                         
|                                                         
|                                                         
|Goodwill and premium on deposits                          |                                                                                                                                                                                         |                              | 28,969                                     |         |              |           | 32,827    |        
|                                                         
|                                                         
|                                                         
|                                                         
|Other assets                                              |                                                                                                                                                                                         |                              | 36,418                                     |         |              |           | 38,546    |        
|                                                          |                                                                                                                                                                                         |                              |                                            |         |              |           |           |        
|                                                          |                                                                                                                                                                                         |                              | Total assets                               |         | $            | 2,440,604 |           |         | $         | 2,566,026 | 
|                                                          |                                                                                                                                                                                         |                              |                                            |         |              |           |           |        
|LIABILITIES AND STOCKHOLDERS EQUITY                     
|                                                         
|                                                         
|                                                         
|                                                         
|Liabilities:                                             
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Deposits-                                                                                                                                                                              
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                                                                                                                                         | Noninterest bearing checking |                                            | $       | 133,950      |           |           | $       | 138,019   |          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                                                                                                                                         | Interest checking            |                                            |         | 178,777      |           |           |         | 187,463   |          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                                                                                                                                         | Money market                 |                                            |         | 295,918      |           |           |         | 211,558   |          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                                                                                                                                         | Savings                      |                                            |         | 199,875      |           |           |         | 309,996   |          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                                                                                                                                         | Time deposits                |                                            |         | 1,349,297    |           |           |         | 1,446,173 |          
|                                                          |                                                                                                                                                                                         |                              |                                            |         |              |           |           |        
|                                                          |                                                                                                                                                                                         |                              | Total deposits                             |         |              | 2,157,817 |           |         |           | 2,293,209 | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Securities sold under agreements to repurchase                                                                                                                                          |                              |                                            | 41,581  |              |           |           | 37,241  |          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | FHLB advances                                                                                                                                                                           |                              |                                            | 761     |              |           |           | 769     |          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Holding company senior debt                                                                                                                                                             |                              |                                            | 6,833   |              |           |           | 9,167   |          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Convertible subordinated debt                                                                                                                                                           |                              |                                            | 14,712  |              |           |           | 14,684  |          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Term subordinated debt and unsecured notes                                                                                                                                              |                              |                                            | 6,250   |              |           |           | 2,750   |          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Other liabilities                                                                                                                                                                       |                              |                                            | 11,559  |              |           |           | 9,211   |          
|                                                          |                                                                                                                                                                                         |                              |                                            |         |              |           |           |        
|                                                          |                                                                                                                                                                                         |                              | Total liabilities                          |         |              | 2,239,513 |           |         |           | 2,367,031 | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Company-obligated mandatorily redeemable preferred
securities of subsidiary trust solely holding junior
subordinated debentures of the Company                                          |                              |                                            | 28,750  |              |           |           | 28,750  |          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Stockholders equity:                                                                                                                                                                  
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Perpetual preferred convertible stock ($20.00 par, 100,000 shares authorized,
75,000 shares issued and outstanding. Liquidation preference $6.6 million
at December 31, 2000 and 1999.) |                              |                                            | 1,500   |              |           |           | 1,500   |          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Common stock ($2.00 par, 20,000,000 shares authorized, 10,555,989 and 10,555,889
shares issued and outstanding at December 31, 2000 and 1999, respectively)                             |                              |                                            | 21,112  |              |           |           | 21,112  |          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Capital surplus                                                                                                                                                                         |                              |                                            | 128,735 |              |           |           | 128,780 |          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Retained earnings                                                                                                                                                                       |                              |                                            | 21,669  |              |           |           | 26,530  |          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Net unrealized losses on available for sale securities, net of tax effect                                                                                                               |                              |                                            | (675    | )            |           |           | (7,677  | )        
|                                                          |                                                                                                                                                                                         |                              |                                            |         |              |           |           |        
|                                                          |                                                                                                                                                                                         |                              | Total stockholders equity                 |         |              | 172,341   |           |         |           | 170,245   | 
|                                                          |                                                                                                                                                                                         |                              |                                            |         |              |           |           |        
|                                                          |                                                                                                                                                                                         |                              | Total liabilities and stockholders equity |         | $            | 2,440,604 |           |         | $         | 2,566,026 | 
|                                                          |                                                                                                                                                                                         |                              |                                            |         |              |           |           |        

The accompanying notes are an integral part of these consolidated statements.

46



---



REPUBLIC BANCSHARES, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands, except share and per share data)

|                                                                         |                                         |                                                     |            |                                  |         |      |            |         |         |   |           |         |         |  
|------------------------------------------------------------------------ | --------------------------------------- | --------------------------------------------------- | ---------- | -------------------------------- | ------- | ---- | ---------- | ------- | ------- | - | --------- | ------- | ------- | -
|                                                                         |                                         |                                                     |            | For the years ended December 31,
|                                                                         |                                         |                                                     |            |                                 
|                                                                         |                                         |                                                     |            | 2000                             |         | 1999 |            | 1998   
|                                                                         |                                         |                                                     |            |                                  |         |      |            |        
|INTEREST INCOME:                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Interest and fees on loans              |                                                     | $          | 162,776                          |         |      | $          | 166,656 |         |   | $         | 159,495 |        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Interest on investment securities       |                                                     |            | 1,232                            |         |      |            | 2,075   |         |   |           | 2,364   |        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Interest on mortgage-backed securities  |                                                     |            | 25,355                           |         |      |            | 12,840  |         |   |           | 1,669   |        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Interest on trading securities          |                                                     |            | 1,170                            |         |      |            | 2,224   |         |   |           | 2,859   |        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Interest on federal funds sold          |                                                     |            | 5,055                            |         |      |            | 5,206   |         |   |           | 5,435   |        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Interest on commercial paper            |                                                     |            | 112                              |         |      |            | 347     |         |   |           |        |        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Interest on other investments           |                                                     |            | 1,500                            |         |      |            | 1,415   |         |   |           | 971     |        
|                                                                         |                                         |                                                     |            |                                  |         |      |            |         |         |   |           |        
|                                                                         |                                         | Total interest income                               |            |                                  | 197,200 |      |            |         | 190,763 |   |           |         | 172,793 |  
|                                                                         |                                         |                                                     |            |                                  |         |      |            |         |         |   |           |        
|INTEREST EXPENSE:                                                       
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Interest on deposits                    |                                                     |            | 102,893                          |         |      |            | 94,133  |         |   |           | 81,157  |        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Interest on FHLB advances               |                                                     |            | 81                               |         |      |            | 164     |         |   |           | 6,103   |        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Interest on holding company debt        |                                                     |            | 2,198                            |         |      |            | 2,277   |         |   |           | 507     |        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Interest on other borrowings            |                                                     |            | 2,305                            |         |      |            | 1,806   |         |   |           | 1,842   |        
|                                                                         |                                         |                                                     |            |                                  |         |      |            |         |         |   |           |        
|                                                                         |                                         | Total interest expense                              |            |                                  | 107,477 |      |            |         | 98,380  |   |           |         | 89,609  |  
|                                                                         |                                         |                                                     |            |                                  |         |      |            |         |         |   |           |        
|                                                                         |                                         | Net interest income                                 |            |                                  | 89,723  |      |            |         | 92,383  |   |           |         | 83,184  |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|PROVISION FOR LOAN LOSSES                                                |                                         |                                                     | 20,700     |                                  |         |      | 9,923      |         |         |   | 14,261    |        
|                                                                         |                                         |                                                     |            |                                  |         |      |            |         |         |   |           |        
|                                                                         |                                         | Net interest income after provision for loan losses |            |                                  | 69,023  |      |            |         | 82,460  |   |           |         | 68,923  |  
|                                                                         |                                         |                                                     |            |                                  |         |      |            |         |         |   |           |        
|NONINTEREST INCOME:                                                     
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Service charges on deposit accounts     |                                                     |            | 7,923                            |         |      |            | 6,833   |         |   |           | 5,442   |        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Loan service fees                       |                                                     |            | 5,951                            |         |      |            | 6,584   |         |   |           | 692     |        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Other loan fee income                   |                                                     |            | 4,324                            |         |      |            | 4,281   |         |   |           | 2,486   |        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Income from mortgage banking activities |                                                     |            |                                 |         |      |            |        |         |   |           | 40,600  |        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Gain on sale of loans, net              |                                                     |            | 543                              |         |      |            | 3,602   |         |   |           | 2,890   |        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Gain (loss) on securities, net          |                                                     |            | (13,252                          | )       |      |            | (714    | )       |   |           | 1,040   |        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Other operating income                  |                                                     |            | 1,822                            |         |      |            | 5,246   |         |   |           | 3,007   |        
|                                                                         |                                         |                                                     |            |                                  |         |      |            |         |         |   |           |        
|                                                                         |                                         | Total noninterest income                            |            |                                  | 7,311   |      |            |         | 25,832  |   |           |         | 56,157  |  
|                                                                         |                                         |                                                     |            |                                  |         |      |            |         |         |   |           |        
|NONINTEREST EXPENSES:                                                   
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                         | Salaries and employee benefits                      |            |                                  | 37,456  |      |            |         | 41,716  |   |           |         | 53,257  |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                         | Net occupancy expense                               |            |                                  | 15,939  |      |            |         | 15,958  |   |           |         | 13,623  |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                         | Advertising and marketing                           |            |                                  | 1,037   |      |            |         | 1,103   |   |           |         | 18,776  |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                         | Data and item processing fees and services          |            |                                  | 4,629   |      |            |         | 4,823   |   |           |         | 3,743   |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                         | Other operating expense                             |            |                                  | 16,464  |      |            |         | 20,830  |   |           |         | 39,618  |  
|                                                                         |                                         |                                                     |            |                                  |         |      |            |         |         |   |           |        
|                                                                         |                                         | Total operating expenses                            |            |                                  | 75,525  |      |            |         | 84,430  |   |           |         | 129,017 |  
|                                                                         |                                         |                                                     |            |                                  |         |      |            |         |         |   |           |        
|                                                                         |                                         | Merger expenses                                     |            |                                  |        |      |            |         |        |   |           |         | 3,233   |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                         | Restructuring cost                                  |            |                                  |        |      |            |         |        |   |           |         | 6,673   |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                         | Provision for losses on ORE                         |            |                                  | 225     |      |            |         | 80      |   |           |         | 1,603   |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                         | ORE expense (income), net                           |            |                                  | 422     |      |            |         | (307    | ) |           |         | (40     | )
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                         | Amortization of goodwill & premium on deposits      |            |                                  | 3,858   |      |            |         | 3,910   |   |           |         | 1,930   |  
|                                                                         |                                         |                                                     |            |                                  |         |      |            |         |         |   |           |        
|                                                                         |                                         | Total noninterest expenses                          |            |                                  | 80,030  |      |            |         | 88,113  |   |           |         | 142,416 |  
|                                                                         |                                         |                                                     |            |                                  |         |      |            |         |         |   |           |        
|Income (loss) before income taxes and minority interest                  |                                         |                                                     | (3,696     | )                                |         |      | 20,179     |         |         |   | (17,336   | )      
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Income tax (provision) benefit                                           |                                         |                                                     | 787        |                                  |         |      | (7,800     | )       |         |   | 6,602     |        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Minority interest in income from subsidiary trust, net of tax            |                                         |                                                     | (1,689     | )                                |         |      | (1,687     | )       |         |   | (1,687    | )      
|                                                                         |                                         |                                                     |            |                                  |         |      |            |         |         |   |           |        
|NET INCOME (LOSS)                                                        |                                         | $                                                   | (4,598     | )                                |         | $    | 10,692     |         |         | $ | (12,421   | )      
|                                                                         |                                         |                                                     |            |                                  |         |      |            |         |         |   |           |        
|PER SHARE DATA:                                                         
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Net income (loss) per common share-basic                                 |                                         | $                                                   | (.46       | )                                |         | $    | .99        |         |         | $ | (1.34     | )      
|                                                                         |                                         |                                                     |            |                                  |         |      |            |         |         |   |           |        
|Weighted average common shares outstanding-basic                         |                                         |                                                     | 10,555,941 |                                  |         |      | 10,484,650 |         |         |   | 9,286,813 |        
|                                                                         |                                         |                                                     |            |                                  |         |      |            |         |         |   |           |        
|Net income (loss) per common and common equivalent
shares-diluted        |                                         | $                                                   | (.46       | )                                |         | $    | .95        |         |         | $ | (1.34     | )      
|                                                                         |                                         |                                                     |            |                                  |         |      |            |         |         |   |           |        
|Weighted average common and common equivalent
shares outstanding-diluted |                                         |                                                     | 10,555,941 |                                  |         |      | 11,299,902 |         |         |   | 9,286,813 |        
|                                                                         |                                         |                                                     |            |                                  |         |      |            |         |         |   |           |        

The accompanying notes are an integral part of these consolidated statements.

47



---



REPUBLIC BANCSHARES, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000
($ in thousands)

|                                                                          |  |                     |        |              |  |        |       |        |  |         |            |  |  |         |        |  |  |   |         |  
|------------------------------------------------------------------------- |  | ------------------- | ------ | ------------ |  | ------ | ----- | ------ |  | ------- | ---------- |  |  | ------- | ------ |  |  | - | ------- | -
|                                                                          |  | Perpetual Preferred
|                                                                          |  | Convertible Stock   |        | Common Stock
|                                                                          |  |                     |        |             
|                                                                          |  | Shares              |        |              |  |        |       | Shares |  |         |            |  |  | Capital
|                                                                          |  | Issued              |        | Amount       |  | Issued |       | Amount |  | Surplus
|                                                                          |  |                     |        |              |  |        |       |        |  |        
|Balance, December 31, 1997                                                |  |                     | 75,000 |              |  | $      | 1,500 |        |  |         | 7,602,992  |  |  | $       | 15,206 |  |  | $ | 56,553  |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Net loss                                                                  |  |                     |       |              |  |        |      |        |  |         |           |  |  |         |       |  |  |   |        |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Net unrealized losses on
available for sale securities,
net of tax effect |  |                     |       |              |  |        |      |        |  |         |           |  |  |         |       |  |  |   |        |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Exercise of stock options                                                 |  |                     |       |              |  |        |      |        |  |         | 78,052     |  |  |         | 156    |  |  |   | 662     |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Issuance of common stock                                                  |  |                     |       |              |  |        |      |        |  |         | 2,642,150  |  |  |         | 5,284  |  |  |   | 67,598  |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Additional capital surplus from
non-qualified/performance
stock options   |  |                     |       |              |  |        |      |        |  |         |           |  |  |         |       |  |  |   | 551     |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Dividends on preferred stock                                              |  |                     |       |              |  |        |      |        |  |         |           |  |  |         |       |  |  |   |        |  
|                                                                          |  |                     |        |              |  |        |       |        |  |         |            |  |  |         |        |  |  |   |         |  
|Balance, December 31, 1998                                                |  |                     | 75,000 |              |  |        | 1,500 |        |  |         | 10,323,194 |  |  |         | 20,646 |  |  |   | 125,364 |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Net income                                                                |  |                     |       |              |  |        |      |        |  |         |           |  |  |         |       |  |  |   |        |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Net unrealized losses on
available for sale securities,
net of tax effect |  |                     |       |              |  |        |      |        |  |         |           |  |  |         |       |  |  |   |        |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Exercise of stock options                                                 |  |                     |       |              |  |        |      |        |  |         | 232,695    |  |  |         | 466    |  |  |   | 2,313   |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Additional capital surplus from
non-qualified/performance
stock options   |  |                     |       |              |  |        |      |        |  |         |           |  |  |         |       |  |  |   | 1,103   |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Dividends on preferred stock                                              |  |                     |       |              |  |        |      |        |  |         |           |  |  |         |       |  |  |   |        |  
|                                                                          |  |                     |        |              |  |        |       |        |  |         |            |  |  |         |        |  |  |   |         |  
|Balance, December 31, 1999                                                |  |                     | 75,000 |              |  |        | 1,500 |        |  |         | 10,555,889 |  |  |         | 21,112 |  |  |   | 128,780 |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Net loss                                                                  |  |                     |       |              |  |        |      |        |  |         |           |  |  |         |       |  |  |   |        |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Net unrealized gains on
available for sale securities,
net of tax effect  |  |                     |       |              |  |        |      |        |  |         |           |  |  |         |       |  |  |   |        |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Exercise of stock options                                                 |  |                     |       |              |  |        |      |        |  |         | 100        |  |  |         |       |  |  |   | 1       |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Adjustment to capital surplus
from nonqualified/performance
stock options |  |                     |       |              |  |        |      |        |  |         |           |  |  |         |       |  |  |   | (46     | )
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Dividends on preferred stock                                              |  |                     |       |              |  |        |      |        |  |         |           |  |  |         |       |  |  |   |        |  
|                                                                          |  |                     |        |              |  |        |       |        |  |         |            |  |  |         |        |  |  |   |         |  
|Balance, December 31, 2000                                                |  |                     | 75,000 |              |  | $      | 1,500 |        |  |         | 10,555,989 |  |  | $       | 21,112 |  |  | $ | 128,735 |  
|                                                                          |  |                     |        |              |  |        |       |        |  |         |            |  |  |         |        |  |  |   |         |  

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                                          |  |          |         |            |  |                |        |   |  |   |         |  
|------------------------------------------------------------------------- |  | -------- | ------- | ---------- |  | -------------- | ------ | - |  | - | ------- | -
|                                                                          |  |          |         |            |  | Net Unrealized
|                                                                          |  |          |         |            |  | Gains/(Losses)
|                                                                          |  |          |         |            |  | on Available  
|                                                                          |  | Retained |         | for Sale  
|                                                                          |  | Earnings |         | Securities |  | Total         
|                                                                          |  |          |         |            |  |               
|Balance, December 31, 1997                                                |  | $        | 28,789  |            |  | $              | 482    |   |  | $ | 102,530 |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Net loss                                                                  |  |          | (12,421 | )          |  |                |       |   |  |   | (12,421 | )
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Net unrealized losses on
available for sale securities,
net of tax effect |  |          |        |            |  |                | (498   | ) |  |   | (498    | )
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Exercise of stock options                                                 |  |          |        |            |  |                |       |   |  |   | 818     |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Issuance of common stock                                                  |  |          |        |            |  |                |       |   |  |   | 72,882  |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Additional capital surplus from
non-qualified/performance
stock options   |  |          |        |            |  |                |       |   |  |   | 551     |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Dividends on preferred stock                                              |  |          | (265    | )          |  |                |       |   |  |   | (265    | )
|                                                                          |  |          |         |            |  |                |        |   |  |   |         |  
|Balance, December 31, 1998                                                |  |          | 16,103  |            |  |                | (16    | ) |  |   | 163,597 |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Net income                                                                |  |          | 10,692  |            |  |                |       |   |  |   | 10,692  |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Net unrealized losses on
available for sale securities,
net of tax effect |  |          |        |            |  |                | (7,661 | ) |  |   | (7,661  | )
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Exercise of stock options                                                 |  |          |         |            |  |                |       |   |  |   | 2,779   |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Additional capital surplus from
non-qualified/performance
stock options   |  |          |        |            |  |                |       |   |  |   | 1,103   |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Dividends on preferred stock                                              |  |          | (265    | )          |  |                |       |   |  |   | (265    | )
|                                                                          |  |          |         |            |  |                |        |   |  |   |         |  
|Balance, December 31, 1999                                                |  |          | 26,530  |            |  |                | (7,677 | ) |  |   | 170,245 |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Net loss                                                                  |  |          | (4,598  | )          |  |                |       |   |  |   | (4,598  | )
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Net unrealized gains on
available for sale securities,
net of tax effect  |  |          |        |            |  |                | 7,002  |   |  |   | 7,002   |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Exercise of stock options                                                 |  |          |        |            |  |                |       |   |  |   | 1       |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Adjustment to capital surplus
from nonqualified/performance
stock options |  |          |        |            |  |                |       |   |  |   | (46     | )
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Dividends on preferred stock                                              |  |          | (263    | )          |  |                |       |   |  |   | (263    | )
|                                                                          |  |          |         |            |  |                |        |   |  |   |         |  
|Balance, December 31, 2000                                                |  | $        | 21,669  |            |  | $              | (675   | ) |  | $ | 172,341 |  
|                                                                          |  |          |         |            |  |                |        |   |  |   |         |  

REPUBLIC BANCSHARES, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
($ in thousands)

|                                                                         |                                                                    |                               |        |                                  |       |      |        |        |        |   |         |     |      |  
|------------------------------------------------------------------------ | ------------------------------------------------------------------ | ----------------------------- | ------ | -------------------------------- | ----- | ---- | ------ | ------ | ------ | - | ------- | --- | ---- | -
|                                                                         |                                                                    |                               |        | For the Years Ended December 31,
|                                                                         |                                                                    |                               |        |                                 
|                                                                         |                                                                    |                               |        | 2000                             |       | 1999 |        | 1998  
|                                                                         |                                                                    |                               |        |                                  |       |      |        |       
|Net income (loss)                                                        |                                                                    | $                             | (4,598 | )                                |       | $    | 10,692 |        |        | $ | (12,421 | )  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Unrealized gains (losses) on available
for sale securities:             
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Unrealized holding gains (losses), net
of tax effect during period |                               |        | 7,242                            |       |      |        | (7,661 | )      |   |         | 369 |     
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Less reclassification adjustment for
gains realized in net income (loss) |                                                                    |                               | (240   | )                                |       |      |       |        |        |   | (867    | )  
|                                                                         |                                                                    |                               |        |                                  |       |      |        |        |        |   |         |    
|                                                                         |                                                                    | Net unrealized gains (losses) |        |                                  | 7,002 |      |        |        | (7,661 | ) |         |     | (498 | )
|                                                                         |                                                                    |                               |        |                                  |       |      |        |        |        |   |         |    
|Comprehensive income (loss)                                              |                                                                    | $                             | 2,404  |                                  |       | $    | 3,031  |        |        | $ | (12,919 | )  
|                                                                         |                                                                    |                               |        |                                  |       |      |        |        |        |   |         |    

The accompanying notes are an integral part of these consolidated statements

48



---



REPUBLIC BANCSHARES, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)

|                                                                                               |                                                       |                                                 |                                |                                                     |        |                                  |          |         |         |       |          |        |        |   |          |  
|---------------------------------------------------------------------------------------------- | ----------------------------------------------------- | ----------------------------------------------- | ------------------------------ | --------------------------------------------------- | ------ | -------------------------------- | -------- | ------- | ------- | ----- | -------- | ------ | ------ | - | -------- | -
|                                                                                               |                                                       |                                                 |                                |                                                     |        | For the Years Ended December 31,
|                                                                                               |                                                       |                                                 |                                |                                                     |        |                                 
|                                                                                               |                                                       |                                                 |                                |                                                     |        | 2000                             |          | 1999    |         | 1998 
|                                                                                               |                                                       |                                                 |                                |                                                     |        |                                  |          |         |         |      
|OPERATING ACTIVITIES:                                                                         
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Net income (loss)                                                                              |                                                       | $                                               | (4,598                         | )                                                   |        | $                                | 10,692   |         |         | $     | (12,421  | )     
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Reconciliation of net income (loss) to net cash
provided by (used in) operating activities:   
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Provision for loan and ORE losses                                                              |                                                       |                                                 | 20,925                         |                                                     |        |                                  | 10,003   |         |         |       | 15,864   |       
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Depreciation and amortization, net                                                             |                                                       |                                                 | 9,484                          |                                                     |        |                                  | 18,852   |         |         |       | 17,092   |       
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Amortization of premium (accretion) of fair value, net                                         |                                                       |                                                 | (492                           | )                                                   |        |                                  | 9,012    |         |         |       | 1,943    |       
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Gain on sale of loans                                                                          |                                                       |                                                 | (543                           | )                                                   |        |                                  | (3,602   | )       |         |       | (43,490  | )     
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Loss/(gain) on investment securities                                                           |                                                       |                                                 | 13,252                         |                                                     |        |                                  | 714      |         |         |       | (1,463   | )     
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|(Gain)/loss on sale of other real estate owned                                                 |                                                       |                                                 | 64                             |                                                     |        |                                  | (726     | )       |         |       | 404      |       
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Capitalization of mortgage servicing/residual interest                                         |                                                       |                                                 |                               |                                                     |        |                                  | (3,238   | )       |         |       | (42,362  | )     
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Gain on disposal of premises and equipment                                                     |                                                       |                                                 |                               |                                                     |        |                                  | (621     | )       |         |       | (275     | )     
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Net decrease/(increase) in deferred tax asset                                                  |                                                       |                                                 | (3,645                         | )                                                   |        |                                  | 1,156    |         |         |       | (24      | )     
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Net decrease/(increase) in other assets                                                        |                                                       |                                                 | 2,425                          |                                                     |        |                                  | 11,023   |         |         |       | (16,602  | )     
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Net decrease/(increase) in value of performance/unqualified options                            |                                                       |                                                 | (46                            | )                                                   |        |                                  | 1,103    |         |         |       | 551      |       
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Net (decrease)/increase in other liabilities                                                   |                                                       |                                                 | 2,349                          |                                                     |        |                                  | (12,108  | )       |         |       | 15,530   |       
|                                                                                               |                                                       |                                                 |                                |                                                     |        |                                  |          |         |         |       |          |       
|                                                                                               |                                                       |                                                 |                                | Net cash provided by (used in) operating activities |        |                                  | 39,175   |         |         |       | 42,260   |        |        |   | (65,253  | )
|                                                                                               |                                                       |                                                 |                                |                                                     |        |                                  |          |         |         |       |          |       
|INVESTING ACTIVITIES:                                                                         
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Proceeds from excess of deposit liabilities assumed over assets
acquired, net of cash acquired |                                                       |                                                 |                               |                                                     |        |                                  |         |         |         |       | 253,235  |       
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Net decrease (increase) in loans                                                               |                                                       |                                                 | 156,663                        |                                                     |        |                                  | 85,230   |         |         |       | (573,912 | )     
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Proceeds from sales and maturities of:                                                        
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               |                                                       | Investment securities held to maturity          |                                |                                                     |       |                                  |          |         |        |       |          |        | 2,000  |  
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               |                                                       | Investment securities available for sale        |                                |                                                     | 3,003  |                                  |          |         | 146,500 |       |          |        | 18,000 |  
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               |                                                       | Mortgage-backed securities available for sale   |                                |                                                     | 41,483 |                                  |          |         | 1,552   |       |          |        | 37,055 |  
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               |                                                       | Mortgage-backed securities in trading portfolio |                                |                                                     |       |                                  |          |         |        |       |          |        | 33,778 |  
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               |                                                       | Commercial paper                                |                                |                                                     | 40,000 |                                  |          |         |        |       |          |        |       |  
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               |                                                       | Revenue bonds                                   |                                |                                                     | 960    |                                  |          |         |        |       |          |        |       |  
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Purchase of commercial paper available for sale                                                |                                                       |                                                 |                               |                                                     |        |                                  | (39,541  | )       |         |       |         |       
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Purchase of investment securities available for sale                                           |                                                       |                                                 | (1,938                         | )                                                   |        |                                  | (136,768 | )       |         |       | (28,150  | )     
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Purchase of mortgage backed securities available for sale                                      |                                                       |                                                 | (96,811                        | )                                                   |        |                                  | (226,343 | )       |         |       | (23,543  | )     
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Purchase of mortgage backed securities held to maturity                                        |                                                       |                                                 | (16,980                        | )                                                   |        |                                  | (33,075  | )       |         |       |         |       
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Purchase of mortgage backed securities in trading portfolio                                    |                                                       |                                                 |                               |                                                     |        |                                  |         |         |         |       | (12,000  | )     
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Principal repayment on mortgage backed securities                                              |                                                       |                                                 | 72,783                         |                                                     |        |                                  | 33,772   |         |         |       | 34,529   |       
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Principal repayment on revenue bonds                                                           |                                                       |                                                 |                               |                                                     |        |                                  | 405      |         |         |       | 245      |       
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Purchase of FHLB stock                                                                         |                                                       |                                                 |                               |                                                     |        |                                  | (2,664   | )       |         |       | (2,136   | )     
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Disposal /(purchase) of premises and equipment, net                                            |                                                       |                                                 | (1,502                         | )                                                   |        |                                  | 1,197    |         |         |       | (14,685  | )     
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Proceeds (loss) from sale of other real estate owned                                           |                                                       |                                                 | 6,665                          |                                                     |        |                                  | 8,566    |         |         |       | (4,485   | )     
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Investments in other real estate owned, net                                                    |                                                       |                                                 | 2,631                          |                                                     |        |                                  | 496      |         |         |       | 733      |       
|                                                                                               |                                                       |                                                 |                                |                                                     |        |                                  |          |         |         |       |          |       
|                                                                                               |                                                       |                                                 |                                | Net cash provided by (used in) investing activities |        |                                  | 206,957  |         |         |       | (160,673 | )      |        |   | (279,336 | )
|                                                                                               |                                                       |                                                 |                                |                                                     |        |                                  |          |         |         |       |          |       
|FINANCING ACTIVITIES:                                                                         
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Net increase (decrease) in deposits                                                            |                                                       |                                                 | (135,194                       | )                                                   |        |                                  | 95,778   |         |         |       | 292,807  |       
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Net increase in repurchase agreements                                                          |                                                       |                                                 | 4,340                          |                                                     |        |                                  | 601      |         |         |       | 15,186   |       
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Repayment of FHLB advances, net                                                                |                                                       |                                                 | (8                             | )                                                   |        |                                  | (24,231  | )       |         |       | (14,300  | )     
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Proceeds from issuance of common stock                                                         |                                                       |                                                 | 1                              |                                                     |        |                                  | 2,779    |         |         |       | 73,700   |       
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Proceeds from issuance of debt                                                                 |                                                       |                                                 | 4,500                          |                                                     |        |                                  | 10,535   |         |         |       | 32,000   |       
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Repayment of holding company debt                                                              |                                                       |                                                 | (3,306                         | )                                                   |        |                                  | (15,934  | )       |         |       |         |       
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Dividends on perpetual preferred convertible stock                                             |                                                       |                                                 | (264                           | )                                                   |        |                                  | (264     | )       |         |       | (264     | )     
|                                                                                               |                                                       |                                                 |                                |                                                     |        |                                  |          |         |         |       |          |       
|                                                                                               |                                                       |                                                 |                                | Net cash (used in) provided by financing activities |        |                                  | (129,931 | )       |         |       | 69,264   |        |        |   | 399,129  |  
|                                                                                               |                                                       |                                                 |                                |                                                     |        |                                  |          |         |         |       |          |       
|NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS                                             |                                                       |                                                 | 116,201                        |                                                     |        |                                  | (49,149  | )       |         |       | 54,540   |       
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|CASH AND CASH EQUIVALENTS, beginning of year                                                   |                                                       |                                                 | 93,461                         |                                                     |        |                                  | 142,610  |         |         |       | 88,070   |       
|                                                                                               |                                                       |                                                 |                                |                                                     |        |                                  |          |         |         |       |          |       
|CASH AND CASH EQUIVALENTS, end of year                                                         |                                                       | $                                               | 209,662                        |                                                     |        | $                                | 93,461   |         |         | $     | 142,610  |       
|                                                                                               |                                                       |                                                 |                                |                                                     |        |                                  |          |         |         |       |          |       
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                                             
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Cash paid during the year for interest                |                                                 | $                              | 99,644                                              |        |                                  | $        | 98,159  |         |       | $        | 72,610 |       
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Cash (received) paid during the year for income taxes |                                                 |                                | 4,582                                               |        |                                  |          | (10,883 | )       |       |          | (7,618 | )     
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Non-cash transactions:                               
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               |                                                       |                                                 | Refinancing of unsecured notes |                                                     |        |                                 |          |         |         | 7,000 |          |        |        |  |         

The accompanying notes are an integral part of these consolidated statements

49



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REPUBLIC BANCSHARES, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000

1. BUSINESS:

Basis of Presentation and Organization

The consolidated financial statements of Republic Bancshares, Inc. (the
Company or Republic or We) include the accounts of the Company and its
wholly owned subsidiaries, RBI Capital Trust I (RBI), and Republic Bank (the
Bank) and the Banks wholly-owned subsidiary, Republic Insurance Agency,
Inc. Financial data for 1999 and 1998 includes results of operations for
Republic Bank, F.S.B., which was dissolved on September 10, 1999. All
financial information has been restated for the acquisitions of Bankers
Savings Bank, F.S.B. (BSB) and Lochaven Federal Savings and Loan Association
(Lochaven), both in 1998. All significant intercompany accounts and
transactions have been eliminated. Our primary source of income is from the
Bank, which operates 80 branches throughout Florida. The Banks primary
source of revenue has been derived from net interest income on loans and
investments.

Business Combinations

Bankers Savings Bank, F.S.B.

On November 5, 1998, we merged with BSB, Coral Gables, Florida, (the BSB
Acquisition) in a stock transaction, with BSB stockholders receiving 396,872
shares of our common stock (an exchange ratio of 0.5749 of a share for each
share of BSB common stock). There were also 212,000 options outstanding for
BSB common stock, which were exchanged for 121,853 options for our common
stock. At the date of acquisition, BSB had total assets of $70.0 million, total
loans of $46.2 million, total deposits of $61.1 million and operated two
branches in Dade County. The BSB Acquisition was accounted for as a pooling of
interests with the books and records of BSB combined with ours at historical
cost.

Lochaven Federal Savings and Loan Association

On November 5, 1998 we merged with Lochaven, Orlando, Florida, (the Lochaven
Acquisition) in a stock transaction with Lochaven stockholders receiving
169,084 shares of our common stock (an exchange ratio of 0.2776 of a share for
each share of Lochaven common stock). There were also 35,000 options
outstanding for Lochaven common stock, which were exchanged for 9,716 options
of our common stock. At the date of acquisition, Lochaven had total assets of
$56.5 million, total loans of $44.8 million, total deposits of $54.0 million
and operated one branch in Orange County. The Lochaven Acquisition was
accounted for as a pooling of interests with the books and records of Lochaven
combined with ours at historical cost.

ACQUISITIONS

NationsBank and Barnett Branches

In December 1997, we entered into two agreements with BankAmerica Corporation
(BankAmerica, formerly NationsBank Corporation) to acquire eight branch
offices of BankAmericas subsidiary banks, NationsBank, N.A. (NationsBank)
and Barnett Bank N.A. (Barnett), including the loans and other assets
recorded at those branches, and to assume the deposits and other liabilities
assigned to those branches. The first agreement was consummated on June 19,
1998, representing the acquisition of three NationsBank branches and four
Barnett branches, collectively, located throughout Florida (the Florida
Branches). The second agreement was consummated August 20, 1998, for a
Barnett branch located in Brunswick, Georgia (the Georgia Branch). When
acquired on June 19, 1998, the Florida Branches had deposit liabilities of
$199.9 million and loans of $114.4 million, and the Georgia Branch, at
acquisition, had deposit liabilities of $16.9 million and loans of $7.5
million. We paid a deposit premium of $24.0 million, loan premium of $3.2
million, and a $5.5 million premium for real and personal property for the
NationsBank and Barnett branches. These purchases

50



---



were both accounted for using
purchase accounting rules, with deposit premiums being amortized using the
straight-line method over a 10 year period and the loan and property premiums
being amortized over the life of the underlying assets.

On September 10, 1999, we sold our Georgia Branch to Sapelo National Bank
(Sapelo) for a gain of $1.1 million. Sapelo acquired all of the associated
deposits at the Georgia Branch. This sale also included lease rights on the
building where the Georgia Branch was located and all fixed assets associated
with the property. The Georgia Branch also sold its loan portfolio to the Bank
on September 3, 1999. The Georgia Branch has been dissolved.

Dime Savings Bank, F.S.B.

In March 1998, we entered into an agreement with Dime Savings Bank, F.S.B.
(DSB), to acquire DSBs branch in Deerfield Beach, Florida (Broward County)
and to assume the deposit liabilities, at acquisition date, of approximately
$206.7 million and purchase the personal property and equipment of the branch
for $100,000. The transaction, which was consummated on August 13, 1998, was
accounted for using purchase accounting rules, with a deposit premium of $9.8
million to be amortized over 10 years.

BankAmerica (formerly NationsBank) and Barnett Branch Lease Assumptions and
Facility Purchases

We and BankAmerica entered into a series of purchase, lease assumption and
sublease agreements under which we purchased three former NationsBank branch
offices and leased 22 former branches of NationsBank and Barnett that were
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, certain real
estate and a premium) in connection with the lease assumption transactions.
Three of these branch offices were opened at the end of 1998, with the
remaining offices opened during 1999.

PENDING BRANCH SALES

On December 21, 2000, we announced that we had reached an agreement with CNB
National Bank (CNB) for the sale of two branch offices. These branches are
located in Lake City and Live Oak, Florida and had total deposits of $64.8
million at December 31, 2000. CNB has agreed to purchase the loans, premises,
and other assets assigned to the two branches at their net book value and to
assume the deposit liabilities. In addition, on January 4, 2001, we announced
that we had reached an agreement with Pointe Bank (Pointe) for the sale of
branch offices in Miami-Dade County, Florida. The five offices had total
deposits of $57.6 million at December 31, 2000. Pointe has agreed to purchase
loans at their par value, fixtures, improvements and other assets assigned to
four of the branches at their net book value and to assume deposit liabilities
of all five offices. These sales, which require regulatory approval, are
anticipated to close in the first half of 2001.

RBI Capital Trust I

RBI is our wholly owned subsidiary, which was formed on May 29, 1997, to issue
cumulative trust preferred securities (the Preferred Security or Securities)
to the public. We own all of the securities of RBI that possess general voting
powers. The Preferred Securities, issued through an underwritten public
offering on July 28, 1997, were sold at their $10 par value. RBI issued
2,875,000 shares of the Preferred Securities bearing a dividend rate of 9.10%
for net proceeds of $27.4 million, after deducting underwriting commissions and
other costs. RBI invested the proceeds in our junior subordinated debt, which
also has an interest rate of 9.10%. The Junior Subordinated Debentures will
mature on June 30, 2027 (the Stated Maturity), which date may be shortened to
a date not earlier than June 30, 2002, if certain conditions are met (including
the Company having received prior approval by the Board of Governors of the
Federal Reserve System or any successor agency (the Federal Reserve) if then
required under applicable Federal reserve capital guidelines or policies).
RBIs sole asset is the holding companys junior subordinated debt. Considered
together, our obligations with respect to the issuance of the preferred
securities constitute a full and unconditional guarantee by the Bank Holding
Company of RBIs obligations with respect to the preferred securities. We used
the proceeds from the

51



---



junior subordinated debt to increase the equity capital.
Interest on the junior subordinated debentures and distributions on the
Preferred Securities are payable quarterly in arrears. Distributions on the
Preferred Securities are cumulative and based upon the liquidation value of $10
per Preferred Security. We have the right, at any time, so long as no event of
default has occurred and is continuing, to defer payments of interest on the
junior subordinated debentures, which will require deferral of distribution on
the Preferred Securities, for a period not exceeding 20 consecutive quarters,
provided, that such deferral may not extend beyond the stated maturity of the
junior subordinated debentures. If payments are deferred, we will not be
permitted to declare cash dividends. The Preferred Securities are subject to
mandatory redemption, in whole or in part, upon repayment of the junior
subordinated debentures at maturity or their earlier redemption. We have the
right to redeem the junior subordinated debentures in whole (but not in part)
within 180 days following certain events whether occurring before or after June
30, 2002. The exercise of such right is subject to us receiving regulatory
approval to do so if then required under applicable capital guidelines or
regulatory policies. In addition, we have the right, at any time, to shorten
the maturity of the junior subordinated debentures to a date not earlier than
June 30, 2002. Exercise of this right is also subject to receiving regulatory
approval to do so if then required under applicable capital guidelines or
regulatory policies.

We have reported our obligation, with respect to the holders of the Preferred
Securities, as a separate line item in the accompanying consolidated balance
sheets under the caption Company-obligated mandatorily redeemable preferred
securities of the subsidiary trust solely holding junior subordinated
debentures of the Company. The related dividend expense, net of the tax
benefit, is reported as a separate line item in the accompanying consolidated
statements of operations under the caption Minority interest in income from
subsidiary trust, net of tax.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Estimates, Appraisals and Evaluations

The accompanying financial statements, in conformity with accounting principles
generally accepted in the United States, requires management to make estimates,
appraisals and evaluations of loans, other real estate owned and other assets
and liabilities, and disclosure of contingent assets and liabilities. Changes
in such estimates, appraisals and evaluations might be required because of
rapidly changing economic conditions, changing economic prospects of borrowers
and other factors. Actual results may differ from those estimates.

Investment Securities

Securities that we have both the positive intent and ability to hold to
maturity are classified as Held to Maturity and are carried at historical
cost, adjusted for amortization of premiums and accretion of discounts.
Securities classified as Available for Sale are those securities that may be
sold prior to maturity as part of asset/liability management or in response to
other factors and are carried at fair value with any valuation adjustment
reported in a separate component of stockholders equity, net of tax effect.
Investments identified as Trading, include the resulting residual interest in
cash flows from the securitization of residential and High LTV Loans, where
applicable, and the excess spread, interest only-strip. Trading securities are
carried at market value with any unrealized gains or losses included in the
consolidated statements of operations under Gain (loss) on securities, net.

Interest and dividends on investment securities and amortization of premiums
and accretion of discounts are reported in interest on investment securities.
Gains (losses) realized on sales of investment securities are generally
determined on the specific identification method and are reported under Gain
(loss) on securities, net.

Loans

Interest on commercial and real estate loans and substantially all installment
loans is recognized monthly on the loan balance outstanding. Our policy is to
discontinue accruing interest on loans 90 days or more delinquent and
restructured loans that have not yet demonstrated a sufficient payment history,
which, in our opinion, may be

52



---



doubtful as to the collection of interest or
principal. These loans are designated as non-accrual and any accrued but
unpaid interest previously recorded is reversed against current period interest
revenue.

Loan origination and commitment fees net of certain costs are deferred, and the
amount is amortized as an adjustment to the related loans yield, generally
over the contractual life of the loan. Unearned discounts and premiums on loans
purchased are deferred and amortized as an adjustment to interest income on a
basis that approximates level rates of return over the term of the loan.

Accounting for Transfers and Servicing of Financial Assets and Extinguishment
of Liabilities

In September 2000, the FASB issued SFAS No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities (a replacement
of SFAS No. 125), which will be applied prospectively for transactions
occurring after March 31, 2001. SFAS No. 140 revises the standards for
accounting for securitizations and other transfers of financial assets and
collateral and requires certain disclosures, but carries over most of SFAS
125s provisions. Management believes that the impact of the adoption of SFAS
No. 140 on the results of operations will not be material. SFAS No. 125,
Accounting for Transfers and Servicing of Financial Assets and Extinguishment
of Liabilities, was effective for our fiscal year beginning January 1, 1997.
SFAS No. 125 provided standards for distinguishing transfers of financial
assets that are sales from transfers that are secured borrowings. In addition
to providing further guidance related to the recording of mortgage servicing
rights (MSRs), SFAS No. 125 required that we classified residual interest
retained and excess spread interest only-strip on loans which were securitized,
as trading assets. Consequently, we are required to carry these assets at their
current market value as of the balance sheet date with the resulting valuation
adjustments recorded in the consolidated statements of operations.

We use an automated portfolio analysis system to value our MSRs at the
individual loan level. The model uses current market assumptions for default
probabilities and prepayment speeds based upon individual loan factors,
including interest rate, age, loan type, geography and demographics. The
analysis also takes into consideration the historical aggregate characteristics
of borrowers based on their geographic location. These factors are applied to
each loan based on its own individual characteristics. The valuation is then
stratified based upon agency and then further stratified by variable, fixed and
balloon notes within each agency to determine possible valuation losses within
each category. We had no valuation allowances recorded for the years ended
December 31, 2000 and 1999. The following table shows the amount of servicing
assets which were capitalized and amortized, and the fair value of those assets
as of December 31, for the periods indicated ($ in thousands):

|                             |  |      |        |      |  |      |        |   |  |   |        |  
|---------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | -
|                             |  | 2000 |        | 1999 |  | 1998
|                             |  |      |        |      |  |     
|Balance, beginning of year   |  | $    | 20,681 |      |  | $    | 22,930 |   |  | $ | 7,172  |  
|                            
|                            
|                            
|                            
|Capitalized servicing assets |  |      |       |      |  |      | 3,238  |   |  |   | 20,418 |  
|                            
|                            
|                            
|                            
|Amortization                 |  |      | (4,624 | )    |  |      | (5,487 | ) |  |   | (4,660 | )
|                             |  |      |        |      |  |      |        |   |  |   |        |  
|Balance, end of year         |  | $    | 16,057 |      |  | $    | 20,681 |   |  | $ | 22,930 |  
|                             |  |      |        |      |  |      |        |   |  |   |        |  
|Fair value of assets         |  | $    | 21,888 |      |  | $    | 29,728 |   |  | $ | 29,608 |  
|                             |  |      |        |      |  |      |        |   |  |   |        |  

Allowance for Loan Losses

The allowance for loan losses provides for risks of losses inherent in the
credit extension process. Losses and recoveries are either charged or credited
to the allowance. Our allowance is an amount that we believe will be adequate
to absorb probable losses on existing loans that may become uncollectible,
based on evaluations of the collectibility of loans and prior loan loss
experience. The evaluations take into consideration such factors as changes in
the nature and volume of the loan portfolio, overall portfolio quality, review
of specific problem loans, and current economic conditions that may affect the
borrowers ability to pay. The evaluations are periodically reviewed and
adjustments are recorded in the period in which changes become known.

53



---



Accounting for Impairment of Loans

Our identification of impaired loans considers those loans which are
nonperforming and have been placed on non-accrual status and those loans which
are performing according to all contractual terms of the loan agreement but may
have substantive indication of potential credit weakness. As of December 31,
2000, $53.4 million of loans were considered impaired by us. Approximately
$45.9 million of these loans required valuation allowances, totaling $8.9
million, which are included within the overall allowance for loan losses at
December 31, 2000. Residential mortgages and consumer loans outside the scope
of SFAS No. 114, Accounting by Creditors for Impairment of a Loan, are
collectively evaluated for impairment.

As of December 31, 1999, $23.0 million of loans were considered impaired by us.
Approximately $22.1 million of these loans required valuation allowances,
totaling $3.6 million, which were included within the overall allowance for
loan losses at December 31, 1999.

Premises and Equipment

Premises and equipment are stated at cost, less accumulated depreciation and
amortization. Depreciation and amortization are computed using the
straight-line method over the estimated useful lives of the related assets,
except for leasehold improvements for which the lesser of the estimated useful
life of the asset or the term of the lease is used. The useful lives used in
computing depreciation and amortization are as follows:

|                           |  |       |        | 
|-------------------------- |  | ----- | ------ | 
|                           |  | YEARS
|                           |  |      
|Buildings and improvements |  |       | 39     | 
|                          
|                          
|                          
|                          
|Furniture and equipment    |  |       | 3  7  | 
|                          
|                          
|                          
|                          
|Leasehold improvements     |  |       | 5  15 | 

Gains and losses on routine dispositions are reflected in current operations.
Maintenance, repairs and minor improvements are charged to operating expenses,
and major replacements and improvements are capitalized.

Other Real Estate

ORE represents property acquired through foreclosure proceedings held for sale
and real estate held for investment. ORE is net of a valuation allowance
established to reduce cost to fair value. Losses are charged to the valuation
allowance and recoveries are credited to the allowance. Declines in market
value and gains and losses on disposal are reflected in current operations in
ORE expense. Recoverable costs relating to the development and improvement of
ORE are capitalized whereas routine holding costs are charged to expense. The
sales of these properties are dependent upon various market conditions. We
believe that such sales will result in net proceeds at least equal to present
carrying values.

Income Taxes

We follow the liability method, which establishes deferred tax assets and
liabilities for the temporary differences between the financial reporting bases
and the tax bases of our assets and liabilities at enacted tax rates expected
to be in effect when such amounts are realized or settled. Net deferred tax
assets, whose realization is dependent on taxable earnings of future years, are
recognized when a more-likely-than-not criterion is met, that is, unless a
greater than 50% probability exists that the tax benefits will not actually be
realized sometime in the future.

We file consolidated tax returns with the federal and state taxing authorities.
A tax sharing agreement exists between us and our subsidiaries whereby taxes
for the subsidiaries are computed as if the subsidiaries were separate
entities. Amounts to be paid or credited with respect to current taxes are paid
to or received from us.

54



---



Premium on Deposits

A premium on deposits is recorded for the difference between cash received and
the carrying value of deposits acquired in purchase transactions. This premium
is being amortized on a straight-line basis over three to 10 years.
Approximately $25.8 million and $29.1 million was included in the category
Goodwill and premium on deposits in the accompanying consolidated balance
sheets, as of December 31, 2000, and 1999.

Goodwill

Goodwill is an intangible asset, which represents the excess of the cost of an
acquired enterprise over the fair market value of identifiable assets less the
fair market value of liabilities acquired in purchase transactions. This
goodwill, acquired in acquisitions in 1997, is being amortized on a
straight-line basis over three to 10 years. Approximately $3.2 million and
$3.7 million was included in the category Goodwill and premium on deposits in
the accompanying consolidated balance sheets, as of December 31, 2000 and 1999.

Stock-Based Compensation Plans

We account for our stock-based compensation plans under APB Opinion No. 25,
Accounting for Stock Issued to Employees. We adopted the disclosure option
of SFAS No. 123, Accounting for Stock-Based Compensation, which requires that
companies not electing to account for stock-based compensation as prescribed by
the statement to disclose the pro forma effects on earnings and earnings per
share as if SFAS No. 123 had been adopted. Additionally, certain other
disclosures are required with respect to stock compensation and the assumptions
used are to determine the pro forma effects of SFAS No. 123.

Disclosures About Business Segments

SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information establishes standards for the way we report information about
operating segments in annual financial statements and requires reporting of
selected information about operating segments in interim financial statements.
Through December 31, 1998 our commercial banking and mortgage banking
activities constituted operating segments for which we have provided additional
disclosure regarding their respective assets, revenues, profit or loss and
other operating data.

As a result of the restructuring of our mortgage banking operation in the
fourth quarter of 1998, that operation represented an insubstantial portion of
our overall business activities during 1999 and 2000 and ceased to be a
reportable business segment.

Accounting for Costs of Computer Software for Internal Use

In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position (SOP) 98-1, Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use. SOP 98-1 provides guidance
for capitalizing and expensing the costs of computer software developed or
obtained for internal use. SOP 98-1 was effective for financial statements for
fiscal years beginning after December 15, 1998. The adoption of SOP 98-1 did
not have a material impact on the accompanying consolidated financial
statements.

Accounting for Derivative Instruments and Hedging Activities

In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133 establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, (collectively referred to as
derivatives) and for hedging activities. It requires that entities recognize
all derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. In June 1999, the FASB
issued SFAS No. 137, Accounting for Derivative Instruments and Hedging
Activities  Deferral of the Effective Date of FASB Statement No. 133, which
delayed the date for implementation to all fiscal quarters of all fiscal years
beginning after June 15, 2000. In June, 2000, the FASB issued SFAS No. 138,
Accounting for Certain Derivative Instruments and Certain Hedging Activities 
an amendment of SFAS No. 133, which amends the

55



---



accounting and reporting
standards of SFAS No. 133 for certain derivative instruments and certain
hedging activities. The adoption of SFAS No. 133, on January 1, 2001, did not
have a material effect upon our results of operations.

Accounting for Mortgage-Backed Securities Retained after the Securitization of
Mortgage Loans Held for Sale by a Mortgage Banking Enterprise

In October 1998, the FASB issued SFAS No. 134, Accounting for Mortgage-Backed
Securities Retained after the Securitization of Mortgage Loans Held for Sale by
a Mortgage Banking Enterprise. SFAS No. 134 amends SFAS Nos. 65, Accounting
for Certain Mortgage Banking Activities and SFAS No. 115, Accounting for
Certain Investments in Debt and Equity Securities. SFAS No. 134 establishes
standards for the classification of securities and other beneficial interests
in accordance with SFAS No. 115. SFAS No. 134 allows an enterprise engaged in
mortgage banking activities to classify mortgage-backed securities and other
beneficial interests retained after the securitization of mortgage loans as
trading, available for sale or held to maturity, depending upon an entitys
intent and ability to hold those securities, except for those with sales
commitments in place which must be classified as trading. Previously, such
securities and beneficial interests retained after securitization of mortgage
loans held for sale by an entity engaged in mortgage banking activities were
required to be classified as trading. SFAS No. 134 was effective for periods
beginning after December 15, 1998 with early application permitted. The
adoption of SFAS No. 134 did not have a material financial effect on the
accompanying consolidated financial statements.

Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities (a replacement of SFAS No. 125)

In September 2000, the FASB issued SFAS No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities (a replacement
of SFAS No. 125). SFAS No. 140 revises the standards for accounting for
securitizations and other transfers of financial assets and collateral and
requires certain disclosures, but carries over most of SFAS No. 125s
provisions without reconsideration. SFAS No. 140 is effective for transfers
and servicing of financial assets and extinguishment of liabilities occurring
after March 31, 2001 and requires additional disclosures relating to previous
securitization transactions and collateral for the fiscal years ending after
December 15, 2000. Management does not believe that the adoption of SFAS
No.140 will have a material effect upon our results of operations.

Recognition of Interest Income and Impairment on Purchased and Retained
Beneficial Interest in Securitized Financial Assets

In January 2001, the Emerging Issues Task Force issued EITF 99-20, Recognition
of Interest Income and Impairment on Purchased and Retained Beneficial
Interests in Securitized Financial Assets, which provides guidance on the
method used for the recognition and measurement of interest income and
impairment of those retained interests. EITF 99-20 provides for a transition
date of March 15, 2001. We do not believe that the adoption of EITF 99-20 will
have a material effect upon our results of operations.

Cash Equivalents

For purposes of preparing the consolidated statements of cash flows, cash
equivalents are defined to include cash and due from banks, interest bearing
deposits and federal funds sold.

Reclassifications

Certain reclassifications have been made to prior period financial statements
to conform to the 2000 financial statement presentation. These
reclassifications had no impact on results of operations or financial position.

56



---



3. INVESTMENT SECURITIES:

Our investment securities consisted primarily of U.S. Government Treasuries,
U.S. Agencies and Revenue Bonds. The investment securities at December 31,
2000 and 1999, are summarized as follows ($ in thousands):

|                               |       |   |           |        |            |   |            |    |        |   |        |      |   |   |        |        | 
|------------------------------ | ----- | - | --------- | ------ | ---------- | - | ---------- | -- | ------ | - | ------ | ---- | - | - | ------ | ------ | 
|                               |       |   | Amortized |        | Unrealized |   | Unrealized |    | Market
|                               |       |   | Cost      |        | Gains      |   | Losses     |    | Value 
|                               |       |   |           |        |            |   |            |    |       
|At December 31, 2000:         
|                              
|                              
|                              
|                              
|Available for sale securities:
|                              
|                              
|                              
|                              
|U.S. Government Treasuries     |       | $ | 9,998     |        |            | $ |           |    |        | $ | (11    | )    |   | $ | 9,987  |       
|                              
|                              
|                              
|                              
|U.S. Agencies                  |       |   | 5,000     |        |            |   | 14         |    |        |   |       |      |   |   | 5,014  |       
|                              
|                              
|                              
|                              
|Revenue bond                   |       |   | 3,772     |        |            |   | 28         |    |        |   | (14    | )    |   |   | 3,786  |       
|                               |       |   |           |        |            |   |            |    |        |   |        |      |   |   |        |       
|                               | Total |   | $         | 18,770 |            |   | $          | 42 |        |   | $      | (25  | ) |   | $      | 18,787 | 
|                               |       |   |           |        |            |   |            |    |        |   |        |      |   |   |        |       
|At December 31, 1999:         
|                              
|                              
|                              
|                              
|Available for sale securities:
|                              
|                              
|                              
|                              
|U.S. Government Treasuries     |       | $ | 11,978    |        |            | $ |           |    |        | $ | (147   | )    |   | $ | 11,831 |       
|                              
|                              
|                              
|                              
|U.S. Agencies                  |       |   | 10,000    |        |            |   | 10         |    |        |   | (23    | )    |   |   | 9,987  |       
|                              
|                              
|                              
|                              
|Revenue bond                   |       |   | 3,794     |        |            |   | 18         |    |        |   | (75    | )    |   |   | 3,737  |       
|                              
|                              
|                              
|                              
|Commercial Paper               |       |   | 39,888    |        |            |   |           |    |        |   |       |      |   |   | 39,888 |       
|                               |       |   |           |        |            |   |            |    |        |   |        |      |   |   |        |       
|                               | Total |   | $         | 65,660 |            |   | $          | 28 |        |   | $      | (245 | ) |   | $      | 65,443 | 
|                               |       |   |           |        |            |   |            |    |        |   |        |      |   |   |        |       
|Book Value at December 31:     |       |   |           |        |            |   | 2000       |    |        |   | 1999   |     
|                               |       |   |           |        |            |   |            |    |        |   |        |     
|Available for sale securities  |       |   |           |        |            | $ | 18,787     |    |        | $ | 65,443 |     
|                               |       |   |           |        |            |   |            |    |        |   |        |     

The amortized cost and estimated market value of investment securities at
December 31, 2000, by contractual maturity are shown below ($ in thousands):

|                                |  |                    |        |        |  |         |        |  |  |          |      |  
|------------------------------- |  | ------------------ | ------ | ------ |  | ------- | ------ |  |  | -------- | ---- | -
|                                |  | Available for Sale
|                                |  |                   
|                                |  |                    |        |        |  |         |        |  |  | Weighted
|                                |  | Amortized          |        | Market |  | Average
|                                |  | Cost               |        | Value  |  | Yield  
|                                |  |                    |        |        |  |        
|Due in one year or less         |  | $                  | 10,498 |        |  | $       | 10,489 |  |  |          | 4.86 | %
|                               
|                               
|                               
|                               
|Due one year through five years |  |                    | 840    |        |  |         | 835    |  |  |          | 6.21 |  
|                               
|                               
|                               
|                               
|Due after five years            |  |                    | 7,432  |        |  |         | 7,463  |  |  |          | 7.83 |  
|                                |  |                    |        |        |  |         |        |  |  |          |      |  
|Total                           |  | $                  | 18,770 |        |  | $       | 18,787 |  |  |          | 6.10 | %
|                                |  |                    |        |        |  |         |        |  |  |          |      |  

Proceeds from sales of U.S. Government Treasuries and U.S. Agencies Notes
during the year ended December 31, 2000 were $1.0 million. There were no sales
of U.S. Government Treasuries and Agencies in 1999 and 1998. Gross gains of
$4,800 were realized during the year ended December 31, 2000; no losses were
incurred. U.S. Government Treasuries and U.S. Agencies with a book value of
$15.0 million and $12.0 million at December 31, 2000 and 1999, respectively,
were pledged to secure public deposits and for other purposes.

4. MORTGAGE-BACKED AND HIGH LTV LOAN SECURITIES:

Mortgage-backed securities (MBS), sometimes referred to as pass-through
certificates, represent an interest in a pool of loans. The securities are
issued by three government agencies or corporations: (1) the Government
National Mortgage Association (GNMA); (2) the Federal Home Loan Mortgage
Corporation (FHLMC); and (3) the Federal National Mortgage Association
(FNMA). During 2000 and 1999, we securitized conventional and government
insured first lien mortgage loans with carrying values at securitization of $0
million and $85.6 million, respectively. Securities held to maturity are
recorded at amortized cost, while securities available for sale and trading are
recorded at estimated market value.

57



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Mortgage-backed and High LTV Loan securities that were retained on the balance
sheet at December 31, 2000 and 1999 are summarized as follows ($ in thousands):

|                                             |                               |                              |           |        |           |   |            |         |            |         |         |         |         |         |         |        |         |  | 
|-------------------------------------------- | ----------------------------- | ---------------------------- | --------- | ------ | --------- | - | ---------- | ------- | ---------- | ------- | ------- | ------- | ------- | ------- | ------- | ------ | ------- |  | 
|                                             |                               |                              |           |        | Amortized |   | Unrealized |         | Unrealized |         | Market 
|                                             |                               |                              |           |        | Costs     |   | Gains      |         | Losses     |         | Value  
|                                             |                               |                              |           |        |           |   |            |         |            |         |        
|At December 31, 2000:                       
|                                            
|                                            
|                                            
|                                            
|Available for sale securities:              
|                                            
|                                            
|                                            
|                                            
|GNMA securities                              |                               | $                            | 301,658   |        |           | $ | 716        |         |            | $       | (1,621  | )       |         | $       | 300,753 |       
|                                            
|                                            
|                                            
|                                            
|FHLMC securities                             |                               |                              | 6,606     |        |           |   | 51         |         |            |         | (114    | )       |         |         | 6,543   |       
|                                            
|                                            
|                                            
|                                            
|FNMA securities                              |                               |                              | 18,694    |        |           |   | 118        |         |            |         | (152    | )       |         |         | 18,660  |       
|                                            
|                                            
|                                            
|                                            
|Other MBS securities                         |                               |                              | 3,889     |        |           |   |           |         |            |         | (97     | )       |         |         | 3,792   |       
|                                             |                               |                              |           |        |           |   |            |         |            |         |         |         |         |         |         |       
|                                             |                               | Total MBS available for sale |           | $      | 330,847   |   |            | $       | 885        |         |         | $       | (1,984  | )       |         | $      | 329,748 | 
|                                             |                               |                              |           |        |           |   |            |         |            |         |         |         |         |         |         |       
|Trading securities:                         
|                                            
|                                            
|                                            
|                                            
|Republic Bank Owner Trust 1998-1 B2          |                               | $                            | 10,863    |        |           | $ |           |         |            | $       |        |         |         | $       | 10,863  |       
|                                            
|                                            
|                                            
|                                            
|Republic Bank Owner Trust 1997-1 and 1998-1:
|                                            
|                                            
|                                            
|                                            
|                                             | Overcollateralization         |                              |           | 14,759 |           |   |            |        |            |         |         | (4,580  | )       |         |         | 10,179 |        
|                                            
|                                            
|                                            
|                                            
|                                             | Residual interest             |                              |           | 9,382  |           |   |            |        |            |         |         | (9,382  | )       |         |         |       |        
|                                            
|                                            
|                                            
|                                            
|Excess servicing, interest only-strip        |                               |                              | 3,536     |        |           |   |           |         |            |         |        |         |         |         | 3,536   |       
|                                             |                               |                              |           |        |           |   |            |         |            |         |         |         |         |         |         |       
|                                             | Total MBS trading securities  |                              | $         | 38,540 |           |   | $          |        |            |         | $       | (13,962 | )       |         | $       | 24,578 |        
|                                             |                               |                              |           |        |           |   |            |         |            |         |         |         |         |         |         |       
|Held to maturity:                           
|                                            
|                                            
|                                            
|                                            
|GNMA securities                              |                               | $                            | 13,255    |        |           | $ | 268        |         |            | $       | (1      | )       |         | $       | 13,522  |       
|                                            
|                                            
|                                            
|                                            
|FHLMC securities                             |                               |                              | 8,431     |        |           |   | 81         |         |            |         | (8      | )       |         |         | 8,504   |       
|                                            
|                                            
|                                            
|                                            
|FNMA securities                              |                               |                              | 12,158    |        |           |   | 108        |         |            |         | (30     | )       |         |         | 12,236  |       
|                                             |                               |                              |           |        |           |   |            |         |            |         |         |         |         |         |         |       
|                                             | Total MBS held to maturity    |                              | $         | 33,844 |           |   | $          | 457     |            |         | $       | (39     | )       |         | $       | 34,262 |        
|                                             |                               |                              |           |        |           |   |            |         |            |         |         |         |         |         |         |       
|At December 31, 1999:                       
|                                            
|                                            
|                                            
|                                            
|Available for sale securities:              
|                                            
|                                            
|                                            
|                                            
|GNMA securities                              |                               | $                            | 299,836   |        |           | $ | 277        |         |            | $       | (11,292 | )       |         | $       | 288,821 |       
|                                            
|                                            
|                                            
|                                            
|FHLMC securities                             |                               |                              | 6,020     |        |           |   | 6          |         |            |         | (308    | )       |         |         | 5,718   |       
|                                            
|                                            
|                                            
|                                            
|FNMA securities                              |                               |                              | 17,159    |        |           |   | 139        |         |            |         | (642    | )       |         |         | 16,656  |       
|                                            
|                                            
|                                            
|                                            
|Other MBS securities                         |                               |                              | 4,338     |        |           |   |           |         |            |         | (265    | )       |         |         | 4,073   |       
|                                             |                               |                              |           |        |           |   |            |         |            |         |         |         |         |         |         |       
|                                             |                               | Total MBS available for sale |           | $      | 327,353   |   |            | $       | 422        |         |         | $       | (12,507 | )       |         | $      | 315,268 | 
|                                             |                               |                              |           |        |           |   |            |         |            |         |         |         |         |         |         |       
|Trading securities:                         
|                                            
|                                            
|                                            
|                                            
|Republic Bank Owner Trust 1998-1 B2          |                               | $                            | 10,863    |        |           | $ |           |         |            | $       |        |         |         | $       | 10,863  |       
|                                            
|                                            
|                                            
|                                            
|Republic Bank Owner Trust 1997-1 and 1998-1:
|                                            
|                                            
|                                            
|                                            
|                                             | Overcollateralization         |                              |           | 14,555 |           |   |            |        |            |         |         |        |         |         |         | 14,555 |        
|                                            
|                                            
|                                            
|                                            
|                                             | Residual interest             |                              |           | 10,062 |           |   |            |        |            |         |         | (470    | )       |         |         | 9,592  |        
|                                            
|                                            
|                                            
|                                            
|Excess servicing, interest only-strip        |                               |                              | 4,219     |        |           |   |           |         |            |         |        |         |         |         | 4,219   |       
|                                             |                               |                              |           |        |           |   |            |         |            |         |         |         |         |         |         |       
|                                             | Total MBS trading securities  |                              | $         | 39,699 |           |   | $          |        |            |         | $       | (470    | )       |         | $       | 39,229 |        
|                                             |                               |                              |           |        |           |   |            |         |            |         |         |         |         |         |         |       
|Held to maturity:                           
|                                            
|                                            
|                                            
|                                            
|GNMA securities                              |                               | $                            | 9,899     |        |           | $ | 6          |         |            | $       | (33     | )       |         | $       | 9,872   |       
|                                            
|                                            
|                                            
|                                            
|FHLMC securities                             |                               |                              | 7,140     |        |           |   | 23         |         |            |         | (96     | )       |         |         | 7,067   |       
|                                            
|                                            
|                                            
|                                            
|FNMA securities                              |                               |                              | 16,029    |        |           |   | 68         |         |            |         | (74     | )       |         |         | 16,023  |       
|                                             |                               |                              |           |        |           |   |            |         |            |         |         |         |         |         |         |       
|                                             | Total MBS held to maturity    |                              | $         | 33,068 |           |   | $          | 97      |            |         | $       | (203    | )       |         | $       | 32,962 |        
|                                             |                               |                              |           |        |           |   |            |         |            |         |         |         |         |         |         |       
|Book Value at December 31:                   |                               |                              |           |        |           |   | 2000       |         |            |         | 1999    |        
|                                             |                               |                              |           |        |           |   |            |         |            |         |         |        
|                                             | Available for sale securities |                              |           |        |           |   | $          | 329,748 |            |         | $       | 315,268 |        
|                                            
|                                            
|                                            
|                                            
|                                             | Trading securities            |                              |           |        |           |   |            | 24,578  |            |         |         | 39,229  |        
|                                            
|                                            
|                                            
|                                            
|                                             | Held to maturity securities   |                              |           |        |           |   |            | 33,844  |            |         |         | 33,068  |        
|                                             |                               |                              |           |        |           |   |            |         |            |         |         |        
|                                             |                               |                              | Total MBS |        |           |   |            |         | $          | 388,170 |         |         | $       | 387,565 |        
|                                             |                               |                              |           |        |           |   |            |         |            |         |         |        

58



---



The amortized cost and estimated market value of the MBS portfolio at December
31, 2000, based on stated maturities and/or re-pricing characteristics are
shown below ($ in thousands):

|                                              |                      |   |           |     |            |   |           |        |       |   |         |         |  |   |         |         | 
|--------------------------------------------- | -------------------- | - | --------- | --- | ---------- | - | --------- | ------ | ----- | - | ------- | ------- |  | - | ------- | ------- | 
|                                              |                      |   | Less Than |     | One - Five |   | Over Five
|                                              |                      |   | One Year  |     | Years      |   | Years     |        | Total
|                                              |                      |   |           |     |            |   |           |        |      
|Amortized Cost:                              
|                                             
|                                             
|                                             
|                                             
|Available for sale securities:               
|                                             
|                                             
|                                             
|                                             
|GNMA securities  fixed rate                  |                      | $ |          |     |            | $ | 76        |        |       | $ | 178,982 |         |  | $ | 179,058 |        
|                                             
|                                             
|                                             
|                                             
|GNMA securities  variable rate               |                      |   |          |     |            |   |          |        |       |   | 122,600 |         |  |   | 122,600 |        
|                                             
|                                             
|                                             
|                                             
|FHLMC securities  fixed rate                 |                      |   |          |     |            |   | 889       |        |       |   | 4,415   |         |  |   | 5,304   |        
|                                             
|                                             
|                                             
|                                             
|FHLMC securities  variable rate              |                      |   |          |     |            |   |          |        |       |   | 1,302   |         |  |   | 1,302   |        
|                                             
|                                             
|                                             
|                                             
|FNMA securities  fixed rate                  |                      |   |          |     |            |   | 347       |        |       |   | 9,737   |         |  |   | 10,084  |        
|                                             
|                                             
|                                             
|                                             
|FNMA securities  variable rate               |                      |   |          |     |            |   |          |        |       |   | 8,610   |         |  |   | 8,610   |        
|                                             
|                                             
|                                             
|                                             
|Other MBS securities  fixed rate             |                      |   |          |     |            |   |          |        |       |   | 3,889   |         |  |   | 3,889   |        
|                                             
|                                             
|                                             
|                                             
|Trading securities:                          
|                                             
|                                             
|                                             
|                                             
|Mortgage related residual assets  fixed rate |                      |   |          |     |            |   |          |        |       |   | 38,540  |         |  |   | 38,540  |        
|                                             
|                                             
|                                             
|                                             
|Held to maturity:                            
|                                             
|                                             
|                                             
|                                             
|GNMA securities  fixed rate                  |                      |   |          |     |            |   | 185       |        |       |   | 13,070  |         |  |   | 13,255  |        
|                                             
|                                             
|                                             
|                                             
|FHLMC securities  fixed rate                 |                      |   | 115       |     |            |   | 3,747     |        |       |   | 4,569   |         |  |   | 8,431   |        
|                                             
|                                             
|                                             
|                                             
|FNMA securities  fixed rate                  |                      |   | 203       |     |            |   | 6,716     |        |       |   | 5,239   |         |  |   | 12,158  |        
|                                              |                      |   |           |     |            |   |           |        |       |   |         |         |  |   |         |        
|                                              | Total MBS securities |   | $         | 318 |            |   | $         | 11,960 |       |   | $       | 390,953 |  |   | $       | 403,231 | 
|                                              |                      |   |           |     |            |   |           |        |       |   |         |         |  |   |         |        
|Fair Value:                                  
|                                             
|                                             
|                                             
|                                             
|Available for sale securities:               
|                                             
|                                             
|                                             
|                                             
|GNMA securities  fixed rate                  |                      | $ |          |     |            | $ | 77        |        |       | $ | 177,463 |         |  | $ | 177,540 |        
|                                             
|                                             
|                                             
|                                             
|GNMA securities  variable rate               |                      |   |          |     |            |   |          |        |       |   | 123,213 |         |  |   | 123,213 |        
|                                             
|                                             
|                                             
|                                             
|FHLMC securities  fixed rate                 |                      |   |          |     |            |   | 884       |        |       |   | 4,334   |         |  |   | 5,218   |        
|                                             
|                                             
|                                             
|                                             
|FHLMC securities  variable rate              |                      |   |          |     |            |   |          |        |       |   | 1,325   |         |  |   | 1,325   |        
|                                             
|                                             
|                                             
|                                             
|FNMA securities  fixed rate                  |                      |   |          |     |            |   | 345       |        |       |   | 9,589   |         |  |   | 9,934   |        
|                                             
|                                             
|                                             
|                                             
|FNMA securities  variable rate               |                      |   |          |     |            |   |          |        |       |   | 8,726   |         |  |   | 8,726   |        
|                                             
|                                             
|                                             
|                                             
|Other MBS securities  fixed rate             |                      |   |          |     |            |   |          |        |       |   | 3,792   |         |  |   | 3,792   |        
|                                             
|                                             
|                                             
|                                             
|Trading securities:                          
|                                             
|                                             
|                                             
|                                             
|Mortgage related residual assets  fixed rate |                      |   |          |     |            |   |          |        |       |   | 24,578  |         |  |   | 24,578  |        
|                                             
|                                             
|                                             
|                                             
|Held to maturity:                            
|                                             
|                                             
|                                             
|                                             
|GNMA securities  fixed rate                  |                      |   |          |     |            |   | 186       |        |       |   | 13,336  |         |  |   | 13,522  |        
|                                             
|                                             
|                                             
|                                             
|FHLMC securities  fixed rate                 |                      |   | 114       |     |            |   | 3,743     |        |       |   | 4,647   |         |  |   | 8,504   |        
|                                             
|                                             
|                                             
|                                             
|FNMA securities  fixed rate                  |                      |   | 201       |     |            |   | 6,702     |        |       |   | 5,333   |         |  |   | 12,236  |        
|                                              |                      |   |           |     |            |   |           |        |       |   |         |         |  |   |         |        
|                                              | Total MBS securities |   | $         | 315 |            |   | $         | 11,937 |       |   | $       | 376,336 |  |   | $       | 388,588 | 
|                                              |                      |   |           |     |            |   |           |        |       |   |         |         |  |   |         |        

The amortized cost and estimated market value of the MBS portfolio at December
31, 2000 by contractual maturity are shown below. Actual maturities may differ
from contractual maturities because of prepayments of the underlying mortgages
($ in thousands).

|                                   |       |   |           |         |        |   |         |         |  |  |          |      |  
|---------------------------------- | ----- | - | --------- | ------- | ------ | - | ------- | ------- |  |  | -------- | ---- | -
|                                   |       |   |           |         |        |   |         |         |  |  | Weighted
|                                   |       |   | Amortized |         | Market |   | Average
|                                   |       |   | Cost      |         | Value  |   | Yield  
|                                   |       |   |           |         |        |   |        
|Due in less than one year          |       | $ | 318       |         |        | $ | 315     |         |  |  | 7.42     | %   
|                                  
|                                  
|                                  
|                                  
|Due in one year through five years |       |   | 11,960    |         |        |   | 11,937  |         |  |  | 7.03     |     
|                                  
|                                  
|                                  
|                                  
|Due after five years               |       |   | 390,953   |         |        |   | 376,336 |         |  |  | 6.32     |     
|                                   |       |   |           |         |        |   |         |         |  |  |          |     
|                                   | Total |   | $         | 403,231 |        |   | $       | 388,588 |  |  |          | 6.34 | %
|                                   |       |   |           |         |        |   |         |         |  |  |          |     

59



---



Proceeds from sales of MBS securities during the years ended December 31, 2000,
1999 and 1998 were $41.4 million, $0 and $79.1 million, respectively. Gross
gains of $240,000, $0 and $1.2 million and gross losses of $5,200, $0 and
$363,000, respectively, were realized on these sales. MBS with book and market
values of $67.1 million and $66.9 million, respectively, were pledged to secure
repurchase agreements at December 31, 2000. The market values assigned to the
MBS classified as available for sale were derived using market quotations at
December 31, 2000. Net unrealized holding (losses)/gains on trading securities
of $(13.5) million, $(470,000), and $173,000 were included in income during
2000, 1999, and 1998, respectively.

Securitized Financial Assets

At December 31, 2000, the trading asset category included the following
securities that resulted from our securitization of High LTV Loans: (1) a $10.9
million subordinate tranche purchased from our securitization of High LTV Loans
in June 1998 and (2) $10.2 million in overcollateralization and residual
interests in cash flows from securitizations in December 1997 and June 1998.
Also, the trading category included $3.5 million of excess servicing interest
only strips and other assets included $10.3 million of mortgage servicing
rights that resulted from securitization of first lien mortgage loans. None of
our trading assets were pledged as collateral. The $10.9 million subordinated
tranche is a non-investment grade security which is not considered to be an
acceptable investment under Florida banking laws. We have recorded these
assets at what we believe to be their fair market value.

Trading assets are evaluated at least quarterly with any valuation adjustment
reflected as a trading gain or loss in the consolidated statement of operations
under the caption Gain (loss) on securities, net. Under applicable
accounting rules, use of quoted market values is the preferred method for
valuing trading assets. However, where the market for those assets is illiquid
and price quotations are not readily available, other methods are permitted,
including techniques utilizing the present value of expected cash flows. We
have used present value techniques to value our trading assets. The accounting
policies and methodology used in the initial and current valuation of the
December 1997 and June 1998 securitizations are summarized as follows ($ in
thousands):

|                                           |  |           |         |           |  |   |         |  
|------------------------------------------ |  | --------- | ------- | --------- |  | - | ------- | -
|                                           |  | Initial   |         | Current  
|                                           |  | Valuation |         | Valuation
|                                           |  |           |         |          
|December 1997 Securitization (1997-1)   
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|Collateral amount                          |  | $         | 60,000  |           |  | $ | 31,947  |  
|                                          
|                                          
|                                          
|                                          
|Discount rate                              |  |           | 14.00   | %         |  |   | 15.00   | %
|                                          
|                                          
|                                          
|                                          
|Prepayment speed                           |  |           | 15.00   |           |  |   | 14.00   |  
|                                          
|                                          
|                                          
|                                          
|Cumulative lifetime default rate(1)        |  |           | 9.57    |           |  |   | 22.86   |  
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|Weighted average remaining life (in years) |  |           | 4.12    |           |  |   | 3.16    |  
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|December 1998 Securitization (1998-1)   
|                                          
|                                          
|                                          
|                                          
|Collateral amount                          |  | $         | 240,000 |           |  | $ | 159,017 |  
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|Discount rate                              |  |           | 15.00   | %         |  |   | 15.00   | %
|                                          
|                                          
|                                          
|                                          
|Prepayment speed                           |  |           | 15.00   |           |  |   | 12.00   |  
|                                          
|                                          
|                                          
|                                          
|Cumulative lifetime default rate(1)        |  |           | 10.68   |           |  |   | 19.77   |  
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|Weighted average life (in years)           |  |           | 4.19    |           |  |   | 3.92    |  



---

|(1) |  | Expressed as the percent of total defaults over the expected life
of the collateral to the initial collateral amount.
|--- |  | ---------------------------------------------------------------------------------------------------------------------

60



---



The following schedule summarizes the activity on the underlying assets which
were securitized ($ in thousands):

|                                            |                     |                  |         |        |      |        |        |       |      |  
|------------------------------------------- | ------------------- | ---------------- | ------- | ------ | ---- | ------ | ------ | ----- | ---- | -
|                                            |                     |                  |         | 1998-1 |      | 1997-1
|                                            |                     |                  |         |        |      |       
|As of December 31, 2000                    
|                                           
|                                           
|                                           
|                                           
|Total principal amount outstanding          |                     | $                | 159,017 |        |      | $      | 31,947 |      
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|Cumulative credit losses, net of recoveries |                     |                  | 16,713  |        |      |        | 6,169  |      
|                                           
|                                           
|                                           
|                                           
|Default rate                                |                     |                  | 6.96    | %      |      |        | 10.28  | %    
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|Net credit losses in 2000                   |                     |                  | 8,247   |        |      |        | 2,431  |      
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|Delinquencies at December 31, 2000:        
|                                           
|                                           
|                                           
|                                           
|30-59 days delinquent                       |                     | $                | 3,714   |        |      | $      | 753    |      
|                                           
|                                           
|                                           
|                                           
|60-89 days delinquent                       |                     |                  | 1,921   |        |      |        | 322    |      
|                                           
|                                           
|                                           
|                                           
|90+ days delinquent                         |                     |                  | 3,487   |        |      |        | 965    |      
|                                            |                     |                  |         |        |      |        |        |      
|                                            | Total Delinquencies |                  | $       | 9,122  |      |        | $      | 2,040 |     
|                                            |                     |                  |         |        |      |        |        |      
|                                            |                     | Delinquency rate |         |        | 5.74 | %      |        |       | 6.39 | %
|                                            |                     |                  |         |        |      |        |        |      

The market values of the securities resulting from securitization of High LTV
Loans are extremely sensitive to changes in the assumptions used to present
value the expected cash flows from those assets. The resulting market
valuations and the change from current valuations due to two alternative
changes in the discount rate, the prepayment speed and the cumulative lifetime
default are as follows ($ in thousands):

|                                                                                                                      |  |                   |       |               |  |               |       |   |  |   |       |  
|--------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ----- | ------------- |  | ------------- | ----- | - |  | - | ----- | -
|                                                                                                                      |  |                   |       |               |  | To:          
|                                                                                                                      |  |                   |       |               |  |              
|                                                                                                                      |  | From              |       | Proforma      |  | Proforma     
|                                                                                                                      |  | Current Valuation |       | Valuation (1) |  | Valuation (2)
|                                                                                                                      |  |                   |       |               |  |              
|December 1997 Securitization (1997-1)                                                                              
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|If the discount rate was changed:                                                                                     |  |                   | 15.00 | %             |  |               | 25.00 | % |  |   | 30.00 | %
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|The current valuation would change:                                                                                   |  | $                 | 3,119 |               |  | $             | 1,963 |   |  | $ | 1,597 |  
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|If the prepayment speed was changed:                                                                                  |  |                   | 14.00 | %             |  |               | 25.00 | % |  |   | 30.00 | %
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|The current valuation would change:                                                                                   |  | $                 | 3,119 |               |  | $             | 1,844 |   |  | $ | 1,430 |  
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|If losses over the remaining life were to
increase by 25% and 35%, the cumulative
lifetime default rate would change: |  |                   | 22.86 | %             |  |               | 26.37 | % |  |   | 27.66 | %
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|The current valuation would change:                                                                                   |  | $                 | 3,119 |               |  | $             | 2,077 |   |  | $ | 1,520 |  

|                                                                                                                      |  |                   |       |               |  |               |       |   |  |   |       |  
|--------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ----- | ------------- |  | ------------- | ----- | - |  | - | ----- | -
|                                                                                                                      |  |                   |       |               |  | To:          
|                                                                                                                      |  |                   |       |               |  |              
|                                                                                                                      |  | From              |       | Proforma      |  | Proforma     
|                                                                                                                      |  | Current Valuation |       | Valuation (1) |  | Valuation (2)
|                                                                                                                      |  |                   |       |               |  |              
|December 1998 Securitization (1998-1)                                                                              
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|If the discount rate was changed:                                                                                     |  |                   | 15.00 | %             |  |               | 25.00 | % |  |   | 30.00 | %
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|The current valuation would change:                                                                                   |  | $                 | 7,021 |               |  | $             | 4,666 |   |  | $ | 3,252 |  
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|If the prepayment speed was changed:                                                                                  |  |                   | 12.00 | %             |  |               | 25.00 | % |  |   | 30.00 | %
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|The current valuation would change:                                                                                   |  | $                 | 7,021 |               |  | $             | 1,154 |   |  | $ |      |  
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|If losses over the remaining life were to
increase by 25% and 35%, the cumulative
lifetime default rate would change: |  |                   | 19.77 | %             |  |               | 23.12 | % |  |   | 25.08 | %
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|The current valuation would change:                                                                                   |  | $                 | 7,021 |               |  | $             | 2,790 |   |  | $ | 1,498 |  

61



---



5. LOANS:

Loans at December 31, 2000 and 1999, are summarized as follows ($ in
thousands):

|                                                        |                                |                                       |         |           |           |      |         |           |           | 
|------------------------------------------------------- | ------------------------------ | ------------------------------------- | ------- | --------- | --------- | ---- | ------- | --------- | --------- | 
|                                                        |                                |                                       |         | 2000      |           | 1999
|                                                        |                                |                                       |         |           |           |     
|Real estate mortgage loans:                            
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | One-to-four family residential |                                       | $       | 641,203   |           |      | $       | 719,586   |          
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Nonconforming mortgages        |                                       |         | 65,662    |           |      |         | 79,562    |          
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Multifamily residential        |                                       |         | 85,338    |           |      |         | 80,212    |          
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Warehouse lines of credit      |                                       |         | 39,835    |           |      |         | 96,873    |          
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Commercial real estate         |                                       |         | 443,364   |           |      |         | 426,685   |          
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Construction/land development  |                                       |         | 115,650   |           |      |         | 165,649   |          
|                                                        |                                |                                       |         |           |           |      |         |          
|                                                        |                                | Mortgage loans secured by first liens |         |           | 1,391,052 |      |         |           | 1,568,567 | 
|                                                       
|                                                       
|                                                       
|                                                       
|Commercial (business) loans                             |                                |                                       | 125,145 |           |           |      | 90,639  |          
|                                                       
|                                                       
|                                                       
|                                                       
|Home equity loans                                       |                                |                                       | 137,900 |           |           |      | 119,013 |          
|                                                       
|                                                       
|                                                       
|                                                       
|High LTV Loans                                          |                                |                                       | 39,191  |           |           |      | 96,758  |          
|                                                       
|                                                       
|                                                       
|                                                       
|Consumer loans                                          |                                |                                       | 21,624  |           |           |      | 22,511  |          
|                                                        |                                |                                       |         |           |           |      |         |          
|                                                        | Total gross portfolio loans    |                                       |         | 1,714,912 |           |      |         | 1,897,488 |          
|                                                       
|                                                       
|                                                       
|                                                       
|Less-allowance for loan losses                          |                                |                                       | (33,462 | )         |           |      | (28,177 | )        
|                                                       
|                                                       
|                                                       
|                                                       
|Less-premiums and unearned discounts on loans purchased |                                |                                       | (239    | )         |           |      | 316     |          
|                                                       
|                                                       
|                                                       
|                                                       
|Less-unamortized loan fees, net                         |                                |                                       | (3,331  | )         |           |      | (7,912  | )        
|                                                        |                                |                                       |         |           |           |      |         |          
|                                                        | Total loans held for portfolio |                                       | $       | 1,677,880 |           |      | $       | 1,861,715 |          
|                                                        |                                |                                       |         |           |           |      |         |          

Mortgage loans serviced for others as of December 31, 2000 and 1999, were $1.3
billion and $1.5 billion respectively. Loans on which interest was not being
accrued totaled approximately $49.4 million, $25.0 million, and $36.6 million
at December 31, 2000, 1999 and 1998, respectively. Had interest been accrued
on these loans at their originally contracted rates, interest income would have
been increased by approximately $3.1 million, $3.0 million, and $3.2 million in
the years ended December 31, 2000, 1999 and 1998, respectively. Loans past due
90 days or more and still accruing interest at December 31, 2000 and 1999,
totaled approximately $1.2 million and $171,000 respectively. Our restructured
loans totaled $1.5 million and $1.2 million during 2000 and 1999, respectively.

6. ALLOWANCE FOR LOAN LOSSES:

Changes in the allowance for loan losses were as follows ($ in thousands):

|                           |                                                                      |   |                                  |         |      |   |        |         |   |   |        |        |  
|-------------------------- | -------------------------------------------------------------------- | - | -------------------------------- | ------- | ---- | - | ------ | ------- | - | - | ------ | ------ | -
|                           |                                                                      |   | For the Years Ended December 31,
|                           |                                                                      |   |                                 
|                           |                                                                      |   | 2000                             |         | 1999 |   | 1998  
|                           |                                                                      |   |                                  |         |      |   |       
|BALANCE, beginning of year |                                                                      | $ | 28,177                           |         |      | $ | 28,077 |         |   | $ | 22,023 |       
|                          
|                          
|                          
|                          
|                           | Provision for possible loan losses                                   |   |                                  | 20,700  |      |   |        | 9,923   |   |   |        | 14,261 |  
|                          
|                          
|                          
|                          
|                           | Allowance from purchased loans                                       |   |                                  |        |      |   |        | 275     |   |   |        |       |  
|                          
|                          
|                          
|                          
|                           | Discount on purchased loans allocated
from allowance for loan losses |   |                                  | (389    | )    |   |        | (470    | ) |   |        | (4,303 | )
|                          
|                          
|                          
|                          
|                           | Loans charged-off                                                    |   |                                  | (16,806 | )    |   |        | (11,123 | ) |   |        | (4,394 | )
|                          
|                          
|                          
|                          
|                           | Recoveries of loans charged-off                                      |   |                                  | 1,780   |      |   |        | 1,495   |   |   |        | 490    |  
|                           |                                                                      |   |                                  |         |      |   |        |         |   |   |        |       
|BALANCE, end of year       |                                                                      | $ | 33,462                           |         |      | $ | 28,177 |         |   | $ | 28,077 |       
|                           |                                                                      |   |                                  |         |      |   |        |         |   |   |        |       

While we believe that the allowance for loan losses is adequate at December 31,
2000, based on currently available information, future provisions to the
allowance may be necessary due to changes in economic conditions, deterioration
of creditworthiness of the borrower, the value of underlying collateral or
other factors. Additionally, the Department, the FDIC, and the Federal
Reserve, as an integral part of their regular examination process, periodically
review the allowance for loan losses. These agencies may require additions to
the allowance based on their judgments about information available to them at
the time of examination.

62



---



The portion of the allowance for loan losses that was created through the
allocation of discounts on purchased loans may only be used to absorb losses on
the related acquired loans. As of December 31, 2000 and 1999, approximately
$648,000 and $1.3 million of the allowance remained from the allocation of
discounts on purchased loans.

7. PREMISES AND EQUIPMENT:

Premises and equipment at December 31, 2000 and 1999, included ($ in
thousands):

|                                               |                              |   |         |        |      |   |         |        | 
|---------------------------------------------- | ---------------------------- | - | ------- | ------ | ---- | - | ------- | ------ | 
|                                               |                              |   | 2000    |        | 1999
|                                               |                              |   |         |        |     
|Land                                           |                              | $ | 9,662   |        |      | $ | 9,560   |       
|                                              
|                                              
|                                              
|                                              
|Buildings and improvements                     |                              |   | 28,539  |        |      |   | 30,126  |       
|                                              
|                                              
|                                              
|                                              
|Furniture and equipment                        |                              |   | 30,817  |        |      |   | 31,729  |       
|                                              
|                                              
|                                              
|                                              
|Leasehold improvements                         |                              |   | 5,202   |        |      |   | 5,134   |       
|                                              
|                                              
|                                              
|                                              
|Construction in progress                       |                              |   | 162     |        |      |   | 20      |       
|                                               |                              |   |         |        |      |   |         |       
|                                               | Total premises and equipment |   |         | 74,382 |      |   |         | 76,569 | 
|                                              
|                                              
|                                              
|                                              
|Less-accumulated depreciation and amortization |                              |   | (27,159 | )      |      |   | (23,995 | )     
|                                               |                              |   |         |        |      |   |         |       
|                                               | Premises and equipment, net  |   | $       | 47,223 |      |   | $       | 52,574 | 
|                                               |                              |   |         |        |      |   |         |       

8. OTHER REAL ESTATE:

During 2000, we transferred from premises and equipment to ORE held for
investment, a former operations center that was acquired through the merger, in
1997, with FFO. A valuation charge of $75,000 was recorded resulting in a net
increase in ORE of $455,000.

State banking regulations require us to dispose of all ORE acquired through
foreclosure within five years of acquisition, with a possibility for additional
extensions, each of up to five years. In December 2000, an extension, which
had been received on a piece of property with a book value of $58,000, expired
and the balance was written off. The property, consisting of four residential
lots, is currently under contract with closings expected to be completed in the
first quarter of 2001. There are no other properties, which have exceeded the
five-year holding period limitation.

Loans converted to ORE through foreclosure proceedings totaled $10.0 million,
and $8.9 million, for the years ended December 31, 2000 and 1999, respectively.
Sales of ORE that were financed by us totaled $443,000 and $1.5 million for
the years ended December 31, 2000 and 1999, respectively.

Changes in the valuation allowance for ORE were as follows ($ in thousands):

|                           |                  |   |                                  |     |      |   |       |        |   |   |       |       |  
|-------------------------- | ---------------- | - | -------------------------------- | --- | ---- | - | ----- | ------ | - | - | ----- | ----- | -
|                           |                  |   | For the Years Ended December 31,
|                           |                  |   |                                 
|                           |                  |   | 2000                             |     | 1999 |   | 1998 
|                           |                  |   |                                  |     |      |   |      
|BALANCE, beginning of year |                  | $ | 138                              |     |      | $ | 4,405 |        |   | $ | 3,279 |      
|                          
|                          
|                          
|                          
|                           | Provision        |   |                                  | 225 |      |   |       | 80     |   |   |       | 1,603 |  
|                          
|                          
|                          
|                          
|                           | Charge-offs, net |   |                                  | (58 | )    |   |       | (4,347 | ) |   |       | (477  | )
|                           |                  |   |                                  |     |      |   |       |        |   |   |       |      
|BALANCE, end of year       |                  | $ | 305                              |     |      | $ | 138   |        |   | $ | 4,405 |      
|                           |                  |   |                                  |     |      |   |       |        |   |   |       |      

9. INCOME TAXES:

Income taxes are comprised of the following ($ in thousands):

|                             |  |              |        |      |  |      |        |   |  |   |       | 
|---------------------------- |  | ------------ | ------ | ---- |  | ---- | ------ | - |  | - | ----- | 
|                             |  | For the     
|                             |  | Years Ended 
|                             |  | December 31,
|                             |  |             
|                             |  | 2000         |        | 1999 |  | 1998
|                             |  |              |        |      |  |     
|Current benefit/(provision)  |  | $            | (2,892 | )    |  | $    | (6,411 | ) |  | $ | 4,272 | 
|                            
|                            
|                            
|                            
|Deferred (provision)/benefit |  |              | 3,679  |      |  |      | (1,389 | ) |  |   | 2,330 | 
|                             |  |              |        |      |  |      |        |   |  |   |       | 
|                             |  | $            | 787    |      |  | $    | (7,800 | ) |  | $ | 6,602 | 
|                             |  |              |        |      |  |      |        |   |  |   |       | 

63



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At December 31, 2000, we had approximately $5.3 million of remaining federal
and $6.4 million of state net operating loss carryforwards. These
carryforwards expire in the years 2005 through 2019. Following the change of
ownership in 1993, and the four acquisitions in 1997 and 1998, recognition of
net operating loss carryforwards incurred prior to 1998, are limited to
approximately $732,000 each year under the rules of Internal Revenue Code
Section 382. If the full amount of the limitation is not used in any years,
the amount not used increases the allowable limit in the subsequent year.

The net operating loss incurred during 1998 was carried back to the previous
two years for federal income tax purposes. The remaining 1998 net operating
loss and 1999 federal and state carry-forwards were not subject to any annual
limitations.

Through the merger of FFO in 1997, and BSB and Lochaven in 1998, we acquired
unrecognized deferred tax liabilities of approximately $3.2 million, $17,000
and $69,000, respectively, related to base year reserves calculated under the
thrift bad debt percentage method. If during any taxable year, we cease to be
a bank, these reserves shall be taken into account ratably over the six taxable
year period beginning with such taxable year.

Our effective tax rate varies from the statutory rate of 34%. The reasons for
this difference are as follows ($ in thousands):

|                                            |                                           |       |       |                                  |     |      |        |      |        |   |       |      |       | 
|------------------------------------------- | ----------------------------------------- | ----- | ----- | -------------------------------- | --- | ---- | ------ | ---- | ------ | - | ----- | ---- | ----- | 
|                                            |                                           |       |       | For the Years Ended December 31,
|                                            |                                           |       |       |                                 
|                                            |                                           |       |       | 2000                             |     | 1999 |        | 1998
|                                            |                                           |       |       |                                  |     |      |        |     
|Computed expected tax (provision) benefit |                                           | $     | 1,257 |                                  |     | $    | (6,861 | )    |        | $ | 5,894 |     
|                                           
|                                           
|                                           
|                                           
|Increase (reduction) of taxes:             
|                                           
|                                           
|                                           
|                                           
|                                            | Tax-exempt interest income                |       |       | 14                               |     |      |        | 18   |        |   |       | 18   |      
|                                           
|                                           
|                                           
|                                           
|                                            | Valuation allowance on deferred tax asset |       |       |                                 |     |      |        | 523  |        |   |       |     |      
|                                           
|                                           
|                                           
|                                           
|                                            | Goodwill amortization                     |       |       | (162                             | )   |      |        | (179 | )      |   |       | (162 | )    
|                                           
|                                           
|                                           
|                                           
|                                            | State taxes                               |       |       | (136                             | )   |      |        | (841 | )      |   |       | 624  |      
|                                           
|                                           
|                                           
|                                           
|                                            | Other                                     |       |       | (186                             | )   |      |        | (460 | )      |   |       | 228  |      
|                                            |                                           |       |       |                                  |     |      |        |      |        |   |       |     
|                                            |                                           | Total |       | $                                | 787 |      |        | $    | (7,800 | ) |       | $    | 6,602 | 
|                                            |                                           |       |       |                                  |     |      |        |      |        |   |       |     

Deferred tax assets and liabilities were comprised of the following at December
31, 2000 and 1999 ($ in thousands):

|                                |                                                                                    |                                |                           |        |        |        |      |        |         |        | 
|------------------------------- | ---------------------------------------------------------------------------------- | ------------------------------ | ------------------------- | ------ | ------ | ------ | ---- | ------ | ------- | ------ | 
|                                |                                                                                    |                                |                           |        | 2000   |        | 1999
|                                |                                                                                    |                                |                           |        |        |        |     
|Gross deferred tax assets:     
|                               
|                               
|                               
|                               
|                                | Tax bases over financial bases for loans
(allowance for loan losses and discounts) |                                | $                         | 12,425 |        |        | $    | 10,098 |        
|                               
|                               
|                               
|                               
|                                | Financial amortization of premium over tax amortization                            |                                |                           | 1,446  |        |        |      | 1,094  |        
|                               
|                               
|                               
|                               
|                                | Interest on non-accrual loans                                                      |                                |                           | 442    |        |        |      | 650    |        
|                               
|                               
|                               
|                               
|                                | Tax bases over financial bases for ORE                                             |                                |                           | 55     |        |        |      | 100    |        
|                               
|                               
|                               
|                               
|                                | Net operating losses and tax credit carryforwards                                  |                                |                           | 2,753  |        |        |      | 9,451  |        
|                               
|                               
|                               
|                               
|                                | Other                                                                              |                                |                           | 249    |        |        |      | 136    |        
|                                |                                                                                    |                                |                           |        |        |        |      |       
|                                |                                                                                    |                                | Gross deferred tax assets |        |        | 17,370 |      |        |         | 21,529 | 
|                                |                                                                                    |                                |                           |        |        |        |      |       
|Gross deferred tax liabilities:
|                               
|                               
|                               
|                               
|                                | Gains on sale of loans-financial bases greater than tax bases                      |                                |                           | (168   | )      |        |      | (6,669 | )      
|                               
|                               
|                               
|                               
|                                | Premises and equipment  financial bases greater than tax bases                    |                                |                           | (1,844 | )      |        |      | (1,905 | )      
|                               
|                               
|                               
|                               
|                                | Purchased assets  FMV adjustments                                                 |                                |                           | (531   | )      |        |      | (493   | )      
|                               
|                               
|                               
|                               
|                                | Mortgage servicing rights                                                          |                                |                           | (2,328 | )      |        |      | (3,413 | )      
|                               
|                               
|                               
|                               
|                                | Other                                                                              |                                |                           | (631   | )      |        |      | (826   | )      
|                                |                                                                                    |                                |                           |        |        |        |      |       
|                                |                                                                                    | Gross deferred tax liabilities |                           |        | (5,502 | )      |      |        | (13,306 | )     
|                               
|                               
|                               
|                               
|                                |                                                                                    | Less valuation allowance       |                           |        |       |        |      |        |        |       
|                                |                                                                                    |                                |                           |        |        |        |      |       
|                                |                                                                                    | Net deferred tax asset         |                           | $      | 11,868 |        |      | $      | 8,223   |       
|                                |                                                                                    |                                |                           |        |        |        |      |       

An amount relating to the unrealized gain on available for sale securities,
which is recorded directly to stockholders equity, and is a component of
comprehensive income, increased during 2000 by $4.2 million and increased
during 1999 by $4.6 million.

64



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10. OTHER BORROWINGS:

FHLB Advances

At December 31, 2000, we were required by our collateral agreement with the
FHLB to maintain qualifying first mortgage loans in an amount equal to at least
100% of the FHLB advances outstanding as collateral. The FHLB advances at
December 31, 2000 and 1999 were collateralized by such loans and securities
totaling $761,000 and $769,000, respectively. In addition, all of our FHLB
stock is pledged as collateral for such advances.

Maturities and average interest rates of advances from the FHLB as of December
31, 2000 and 1999, were as follows ($ in thousands):

|              |       |              |      |      |  |              |            |     |  |   |     |     | 
|------------- | ----- | ------------ | ---- | ---- |  | ------------ | ---------- | --- |  | - | --- | --- | 
|              |       |              |      |      |  |              | Balance at
|Maturities in |       |              |      |      |  | December 31,
|Year Ending   |       | Weighted     |      |     
|December 31,  |       | Average Rate |      | 2000 |  | 1999        
|              |       |              |      |      |  |             
|2014          |       |              | 6.85 | %    |  | $            | 761        |     |  | $ | 769 |    
|              |       |              |      |      |  |              |            |     |  |   |     |    
|              | TOTAL |              |      |      |  |              | $          | 761 |  |   | $   | 769 | 
|              |       |              |      |      |  |              |            |     |  |   |     |    

Holding Company Senior Debt

On September 24, 1998, we entered into a loan agreement with SunTrust, under
which SunTrust extended us a non-revolving line of credit (Senior Debt) for
up to $25.0 million. Interest on the loan is payable monthly and the maturity
date for the loan was September 25, 1999. On September 25, 1998, we received
the full $25.0 million balance under the line of credit. The proceeds of the
Senior Debt were used to maintain the regulatory capital at well capitalized
levels and to support the planned branch expansion activities.

The terms of the loan agreement were amended on December 30, 1998 to require,
among other things, that: (1) an interest rate of LIBOR plus 1.50%, effective
January 1, 1999 be paid; (2) we maintain a supervisory rating of no less than
3 on the regulatory composite scale of 1 to 5 (1 being the highest, 5
being the lowest) and that we do not become subject to a cease and desist
order; and (3) upon the written request from SunTrust at any time after March
31, 1999, for any reason whatsoever, Mr. William R. Hough, our Chairman of the
Board and principal shareholder, will purchase the loan from SunTrust.

On March 19, 1999, the loan agreement was further amended to extend the date
for SunTrusts option to request purchase of the loan from March 31, 1999 to
September 24, 1999, the maturity date of the loan. We agreed to establish an
interest reserve account with SunTrust and to deposit in the account sufficient
funds to pay interest on the note through the maturity date. SunTrust retained
its right to request purchase of the loan in the event we failed to comply with
financial covenants of the loan agreement which require us to: (1) maintain our
ratio of nonperforming assets to assets at no more than three percent; (2)
maintain our debt service coverage ratio at no less than two to one; and (3)
eliminate the excess of dividends paid by the Bank to the Company over the
Banks net income for the current and preceding two years by June 30, 1999.

In September 1999, we paid down the principal amount of the Senior Debt by
$15.0 million to a balance of $10.0 million. The $10.5 million of net proceeds
from the sale of Debentures (as defined below), after deducting offering costs,
and the cash received from dissolution of the Georgia Branch, were used to
repay principal on the Senior Debt. In connection with the paydown, SunTrust
agreed to extend the remaining portion of its loan to us through March 31,
2001, with monthly payments of $278,000 principal plus interest at Libor plus
1.50% and a balloon payment on March 24, 2001, of approximately $5.0 million.

As of December 31, 2000, our Senior Debt totaled $6.8 million. We restructured
our Senior Debt in December 2000 such that a principal reduction of $2.0
million was made on January 2, 2001, with the $4.8 million remainder to be
fully amortized over an 18-month period beginning in January 2001.

The terms of the Senior Debt were further amended to require, among other
things, that: (1) an interest rate based on the 90-day LIBOR plus 1.75%, (8.20%
at December 31, 2000) effective December 26, 2000; (2) principal repayments of
$268,518 plus accrued interest payable monthly, maturing on June 30, 2002, and
(3)

65



---



that, upon written request from SunTrust at any time, for any reason
whatsoever, Mr. Hough will purchase the loan from SunTrust.

The December amendment reset all of the financial covenants of the Senior Debt
with the next measurement date occurring on March 31, 2001. These covenants
require us to: (1) maintain our ratio of nonperforming assets to portfolio
loans plus other real estate owned at no more than three and one half percent;
(2) maintain our debt service charge ratio at no less than 1.9 to one through
June 30, 2001, and two to one thereafter; and (3) maintain cash balances in the
holding company at $1.0 million in excess over that amount required pursuant to
the Convertible Debenture Bond Indenture through June 30, 2001, after which
time the excess amount required will increase to $2.0 million. As of December
31, 2000, we were in compliance with the Senior Debt loan agreement.

Convertible Subordinated Debt

In September 1999, we completed a private placement to accredited investors of
$15.0 million of our 7.0% convertible subordinated debentures (the
Debentures) maturing on October 1, 2014. Each $1,000 principal amount of the
Debentures are convertible at any time by the holder into 55.55556 shares of
our $2.00 par value common stock. The resulting conversion price of $18.00 per
share represented a premium of approximately 22% over the $14.75 September 21,
1999, closing price of our common stock on the NASDAQ National Market. The
Debentures are redeemable by us at any time after October 1, 2004, at a premium
of 106% with the premium declining one percent per year thereafter. The
Debentures may also be redeemed at our option, without a premium, if the
closing price of our common stock equals or exceeds $23.40 for 20 consecutive
trading days. The Debentures have an effective rate to maturity of 7.23%.

Term Subordinated Debt and Unsecured Notes

On December 30, 1998, we entered into loan agreements with certain members of
our board of directors to borrow $7.0 million in unsecured notes. Interest on
these notes is payable monthly at a variable rate, changing every 90 days,
equal to the three month LIBOR rate plus 2.50%. The initial rate was 7.747%.
The notes matured on September 25, 1999. We contributed $5.0 million of the
proceeds from these unsecured notes to maintain the regulatory capital at
well-capitalized levels. The remaining $2.0 million of the proceeds was
retained to service our debt. The repayment of principal and interest on these
notes is subordinate to the payment of all principal and interest on the Senior
Debt, and the payment of interest on the Company-obligated mandatorily
redeemable preferred securities of the subsidiary trust solely holding junior
subordinated debentures of the Company.

In September 1999, we refinanced the $7.0 million of debt to our directors.
Approximately $4.3 million of the Debentures were issued to our directors in
exchange for an equal amount of the pre-existing debt, with the balance of the
Debentures being sold to third party accredited investors. The $2.7 million
balance of the $7.0 million debt to the directors not converted into the
Debentures was exchanged for an equal principal amount of non-convertible term
subordinated debt (the Term Debt), maturing on September 22, 2006 with a
variable interest rate of prime plus one percent (or 10.50% at December 31,
2000). Both the Debentures and the Term Debt issued by us qualify as Tier 2
capital under applicable regulatory capital guidelines.

On May 17, 2000, we entered into a loan agreement with Mr. William R. Hough,
individually, to borrow up to $2.0 million on an unsecured, revolving line of
credit basis. The full amount of that line was drawn in the second quarter of
2000. On September 14, 2000, an additional loan agreement was entered into
with Mr. Hough, to borrow up to $1.5 million. The full amount of that line was
drawn in the third quarter of 2000. The proceeds were used for holding company
debt service. Interest on these loans are at a variable rate, changing daily,
and equal to the Citibank, N.A., New York Base Rate (the Index) plus 0.50%.
The rate at December 31, 2000 was 10.00% per annum. The loans have been
amended to extend repayment of all outstanding principal to October 1, 2002.
In addition, we are obligated to pay regular monthly payments of all accrued
unpaid interest due. The repayment of principal and interest on these loans is
subordinate to the payment of all principal and interest on the Senior Debt.

66



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11. OFF-BALANCE-SHEET RISK, COMMITMENTS AND CONTINGENCIES:

Concentration of Credit Risk

Our core customer loan origination base is located along the west coast and in
central Florida. The majority of our purchased loan portfolio is concentrated
in the states of Florida, California, Texas, Georgia, and in the northeastern
United States. At December 31, 2000 and 1999, approximately 91% and 94%,
respectively, of our loan portfolio was secured by real estate. Mortgage loans
secured by one-to-four family properties comprised approximately 46% of total
mortgage loans for both December 31, 2000 and 1999, respectively.

At December 31, 2000, the composition of our loan portfolio, according to the
location of the borrower or the real estate taken as underlying collateral, was
as follows ($ in thousands, unaudited):

|                                      |       |   |           |           |  |          |         |        |  
|------------------------------------- | ----- | - | --------- | --------- |  | -------- | ------- | ------ | -
|                                      |       |   |           |           |  |          | Percent |       
|State                                 |       |   | Amount    |           |  | of Total |        
|                                      |       |   |           |           |  |          |        
|Florida                               |       | $ | 1,293,210 |           |  |          | 75.58   | %     
|                                     
|                                     
|                                     
|                                     
|New England (1)                       |       |   | 90,473    |           |  |          | 5.29    |       
|                                     
|                                     
|                                     
|                                     
|Georgia                               |       |   | 30,814    |           |  |          | 1.80    |       
|                                     
|                                     
|                                     
|                                     
|California                            |       |   | 43,224    |           |  |          | 2.53    |       
|                                     
|                                     
|                                     
|                                     
|Texas                                 |       |   | 39,549    |           |  |          | 2.31    |       
|                                     
|                                     
|                                     
|                                     
|Virginia                              |       |   | 27,413    |           |  |          | 1.60    |       
|                                     
|                                     
|                                     
|                                     
|Illinois                              |       |   | 25,221    |           |  |          | 1.47    |       
|                                     
|                                     
|                                     
|                                     
|New Jersey                            |       |   | 20,602    |           |  |          | 1.20    |       
|                                     
|                                     
|                                     
|                                     
|Ohio                                  |       |   | 17,351    |           |  |          | 1.01    |       
|                                     
|                                     
|                                     
|                                     
|New York                              |       |   | 20,326    |           |  |          | 1.19    |       
|                                     
|                                     
|                                     
|                                     
|North Carolina                        |       |   | 13,376    |           |  |          | 0.78    |       
|                                     
|                                     
|                                     
|                                     
|Missouri                              |       |   | 10,693    |           |  |          | 0.62    |       
|                                     
|                                     
|                                     
|                                     
|All other (none greater than $10,000) |       |   | 79,090    |           |  |          | 4.62    |       
|                                      |       |   |           |           |  |         
|                                      | Total |   | $         | 1,711,342 |  |          |         | 100.00 | %
|                                      |       |   |           |           |  |         



---

|(1) |  | New England has been defined by us to include the states of Connecticut,
Delaware, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------

Off-Balance-Sheet Items

We enter into financial instruments with off-balance-sheet risk in the normal
course of business to meet the financing needs of our customers. These
financial instruments include commitments to extend credit, commercial and
standby letters of credit and unfunded lines of credit. These instruments
involve, to varying degrees, elements of credit and interest-rate risks that
are not recognized in the accompanying consolidated balance sheets.

Our exposure to credit loss in the event of nonperformance by the other party
to the financial instruments discussed above is represented by the contractual
amount of those instruments. We use the same credit policies in making
commitments and conditional obligations as we do for on-balance-sheet
instruments.

A summary of financial instruments with off-balance-sheet risk at December 31,
2000, is as follows ($ in thousands):

|                                         |       |   |             |         | 
|---------------------------------------- | ----- | - | ----------- | ------- | 
|                                         |       |   | Contractual
|                                         |       |   | Amount     
|                                         |       |   |            
|Commitments to extend credit             |       | $ | 131,643     |        
|                                        
|                                        
|                                        
|                                        
|Unfunded lines of credit                 |       |   | 129,552     |        
|                                        
|                                        
|                                        
|                                        
|Commercial and standby letters of credit |       |   | 8,138       |        
|                                         |       |   |             |        
|                                         | Total |   | $           | 269,333 | 
|                                         |       |   |             |        

67



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Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the agreement.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many of the commitments may expire
without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. We evaluate each customers
creditworthiness on a case-by-case basis. The amount of collateral obtained if
deemed necessary upon extension of credit is based on our credit evaluation of
the counter party. Collateral held varies but may include premises and
equipment, inventory and accounts receivable. Unfunded lines of credit
represent the undisbursed portion of lines of credit, which have been extended
to customers.

Commercial and standby letters of credit are conditional commitments issued by
us to guarantee the performance of a customer to a third party, which typically
do not extend beyond one year. The credit risk involved in issuing letters of
credit is essentially the same as those involved in extending loan facilities
to customers. We typically hold certificates of deposit as collateral
supporting those commitments, depending on the strength of the borrower.
Outstanding, unsecured standby letters of credit at December 31, 2000, totaled
approximately $1.2 million.

Commitments

We have entered into a number of non-cancelable operating leases primarily for
branch banking locations. At December 31, 2000, minimum rental commitments
based on the remaining noncancelable lease terms were as follows ($ in
thousands):

|           |                       |                                   |       |      |        | 
|---------- | --------------------- | --------------------------------- | ----- | ---- | ------ | 
|2001       |                       | $                                 | 5,989 |     
|          
|          
|          
|          
|2002       |                       |                                   | 5,209 |     
|          
|          
|          
|          
|2003       |                       |                                   | 4,358 |     
|          
|          
|          
|          
|2004       |                       |                                   | 3,485 |     
|          
|          
|          
|          
|2005       |                       |                                   | 2,165 |     
|          
|          
|          
|          
|Thereafter |                       |                                   | 8,806 |     
|           |                       |                                   |       |     
|           |                       | Gross operating lease commitments |       |      | 30,012 | 
|          
|          
|          
|          
|           | Less-sublease rentals |                                   |       | (802 | )     
|           |                       |                                   |       |     
|           |                       | Net operating lease commitments   |       | $    | 29,210 | 
|           |                       |                                   |       |     

Total rent expense for the years ended December 31, 2000, 1999 and 1998, was
$5.6 million, $6.0 million, and $4.0 million, respectively. Total rental
income from subleases for the years ended December 31, 2000, 1999 and 1998, was
$1.1 million, $909,000, and $1.2 million, respectively. In addition, we are
obligated to make processing payments in relation to our computer facilities of
approximately $328,000 in 2001.

Contingencies

In November 1999, 18 former shareholders of BSB filed a claim against us in the
Miami-Dade County, Florida, Circuit Court that alleges we had knowledge of and
failed to disclose to them, to BSB and to their shareholders, prior to
acquiring BSB in November 1998, the loss incurred for the fourth quarter of
1998 which resulted from the now-discontinued mortgage banking activities. The
claim alleges breach of contract, fraud, negligent misrepresentation and
violation of the Florida Securities and Investor Protection Act. The
plaintiffs have alleged damages generally in an amount exceeding $1 million.
This matter has been scheduled for trial in May, 2001. We believe the
plaintiffs claims are without merit and intend to continue to defend such
action vigorously.

We are subject to various legal proceedings in the ordinary course of business.
Based on information presently available, we do not believe that the ultimate
outcome in such proceedings, in the aggregate, would have a material adverse
effect on our financial position or results of operations.

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12. EMPLOYEE BENEFIT PLANS:

We have a retirement plan, covering substantially all employees, which includes
a 401(k) arrangement. Our contributions were $230,000, $268,000, and $683,800
in the years ended December 31, 2000, 1999 and 1998, respectively.

13. FAIR VALUE OF FINANCIAL INSTRUMENTS:

Generally, our practice and intent is to hold our financial instruments to
maturity, unless otherwise designated. Where available, quoted market prices
are used to determine fair value. However, many of our financial instruments
lack quoted market prices. Although we have incorporated what we consider
appropriate estimation methodologies for those financial instruments which lack
quoted market prices, a significant number of assumptions must be used in
determining such estimated fair values. Such assumptions include subjective
assessments of current market conditions, perceived risks associated with these
financial instruments and other factors. Different assumptions might be
considered by the user of the financial statements to be more appropriate, and
the use of alternative assumptions or estimation methodologies could have a
significant effect on the resulting estimated fair values. The estimated fair
values presented neither include nor give effect to the values associated with
our business, existing customer relationships, and branch banking network,
among other things.

The following estimates of the fair value of certain financial instruments held
by us include only instruments that could reasonably be evaluated. The
investment and mortgage backed securities portfolio was evaluated using market
quotes, where available or fair market values calculations as of December 31,
2000 and 1999. The fair value of the loan portfolio was evaluated using market
quotes for similar financial instruments, where available. Otherwise,
discounted cash flows at current market, after adjusting for credit
deterioration and an average prepayment assumption, were used based upon
current rates we would use in extending credit with similar characteristics.
These rates may not necessarily be the same as those, which might be used by
other financial institutions for similar loans. Cash and due from banks and
federal funds sold were valued at cost. The fair values disclosed for checking
accounts, savings accounts, securities sold under agreements to repurchase, and
certain money market accounts are, by definition, equal to the amount payable
on demand at the reporting date, i.e., their carrying amounts. Fair values for
time deposits are estimated using a discounted cash flow calculation that
applies current interest rates to aggregated expected maturities. Standby
letters of credit and commitments to extend credit were valued at book value as
the majority of these instruments are based on variable rates. The value of
our mortgage servicing rights was determined using the discounted cash flows
from servicing.

These evaluations may incorporate specific value to us in accordance with our
asset/liability strategies, interest rate projections and business plans at a
specific point in time and therefore, should not necessarily be viewed as
liquidation value. They should also not be used in determining our overall
value due to undisclosed and intangible aspects such as business and franchise
value, and due to changes to assumptions of interest rates and expected cash
flows which might need to be made to reflect expectations of returns to be
earned on instruments with higher credit risks.

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The table below illustrates the estimated fair value of our financial
instruments as of December 31 using the assumptions described above ($ in
thousands):

|                       |                                                            |  |      |           |      |  |   |           | 
|---------------------- | ---------------------------------------------------------- |  | ---- | --------- | ---- |  | - | --------- | 
|                       |                                                            |  | 2000 |           | 1999
|                       |                                                            |  |      |           |     
|Financial Assets:     
|                      
|                      
|                      
|                      
|                       | Cash and due from banks                                    |  | $    | 52,540    |      |  | $ | 62,643    | 
|                       |                                                            |  |      |           |      |  |   |          
|                       | Interest bearing deposits in banks                         |  |      | 6,910     |      |  |   | 3,758     | 
|                       |                                                            |  |      |           |      |  |   |          
|                       | Federal funds sold                                         |  |      | 150,212   |      |  |   | 27,060    | 
|                       |                                                            |  |      |           |      |  |   |          
|                       | Investment and mortgage backed/related securities          |  |      | 407,375   |      |  |   | 452,902   | 
|                       |                                                            |  |      |           |      |  |   |          
|                       | Loans                                                      |  |      | 1,722,134 |      |  |   | 1,888,946 | 
|                       |                                                            |  |      |           |      |  |   |          
|                       | Mortgage servicing rights                                  |  |      | 21,709    |      |  |   | 30,247    | 
|                       |                                                            |  |      |           |      |  |   |          
|Financial Liabilities:
|                      
|                      
|                      
|                      
|                       | Deposits                                                   |  |      | 2,171,134 |      |  |   | 2,286,110 | 
|                       |                                                            |  |      |           |      |  |   |          
|                       | Securities sold under agreements to repurchase             |  |      | 41,581    |      |  |   | 37,241    | 
|                       |                                                            |  |      |           |      |  |   |          
|                       | FHLB advances                                              |  |      | 761       |      |  |   | 769       | 
|                       |                                                            |  |      |           |      |  |   |          
|                       | Holding company senior debt                                |  |      | 6,833     |      |  |   | 9,167     | 
|                       |                                                            |  |      |           |      |  |   |          
|                       | Convertible subordinated debt                              |  |      | 14,712    |      |  |   | 14,684    | 
|                       |                                                            |  |      |           |      |  |   |          
|                       | Term subordinated debt and holding company unsecured notes |  |      | 6,250     |      |  |   | 2,750     | 
|                       |                                                            |  |      |           |      |  |   |          
|                       | Standby letters of credit                                  |  |      | 8,138     |      |  |   | 8,860     | 
|                       |                                                            |  |      |           |      |  |   |          
|                       | Commitments to extend credit and unfunded lines of credit  |  |      | 261,195   |      |  |   | 366,126   | 
|                       |                                                            |  |      |           |      |  |   |          

14. STOCKHOLDERS EQUITY:

Perpetual Preferred Convertible Stock

We have 75,000 outstanding shares of perpetual preferred convertible stock.
The preferred stock has a liquidation preference of $88 per share and carries a
noncumulative dividend of $3.52 per year, payable quarterly. Dividends on the
preferred stock must be paid before any dividends on common stock can be paid.
Beginning December 16, 1994, and thereafter, the preferred stock can be
converted by the holders into 10 shares of common stock for each share of
preferred stock. The holders of the preferred stock vote with the holders of
the common stock and are entitled to 10 votes per share of preferred stock.

Dividends

Florida statutes limit the amount of dividends we can pay in any given year to
that years net income plus retained net income from the two preceding years.
Additionally, we cannot pay dividends, which would cause us to be
undercapitalized as defined by federal regulations. Under the Florida Financial
Institutions Code, the prior approval of the Department is required if the
total of all dividends declared by a bank in any calendar year will exceed the
sum of the banks net profits for that year and its retained net profits for
the preceding two years. As of January 1, 2001, there was a net retained
profit surplus for dividend payment purposes of $3.6 million.

Non-qualified Stock Options

The board of directors may grant unqualified options each year. As of December
31, 2000, 115,000 of such options were outstanding. The per share exercise
price of each stock option is determined by the board of directors at the date
of grant, vesting over a five year period.

1995 Incentive Stock Option Plan

On April 29, 1994, the shareholders approved a qualified incentive stock option
plan to certain key employees. In connection with our reorganization and share
exchange in which all of the stockholders adopted the Republic Bancshares, Inc.
1995 Stock Option Plan (the Plan) as a replacement for our 1994 Stock Option
Plan. The

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Plan was approved by the stockholders at a special meeting held on
February 27, 1996. On April 23, 1996 and April 28, 1998, the shareholders
approved certain amendments to the Plan (the Amendments). Under the
Amendments, the total number of shares that may be purchased pursuant to the
Plan cannot exceed 1,125,000 shares over the life of the Plan and provides that
the maximum number of options granted to any one individual in any fiscal year
under the Plan cannot exceed 62,000. There is no limitation on the annual
aggregate number of options to be granted in any fiscal year. Each option
granted under the Plan will be exercisable by the grantee during a term, not to
exceed 10 years, fixed by the compensation committee of the board of directors
(the Committee). However, no more than 20% of the shares subject to such
options shall vest annually beginning at date of grant. However, in the event
of a change in control, or termination of employment without cause, all options
granted become exercisable immediately. As of December 31, 2000, performance
options under the Plan, which were granted to the employees of the mortgage
banking division, have all either been exercised or have expired.

Upon the grant of an option to a key employee, the Committee will fix the
number of shares of common stock that the grantee may purchase upon exercise of
the option, and the price at which the shares may be purchased. The exercise
price for all options shall not be less than the fair market value at the date
of the option grant. During 2000, 1999 and 1998, options to purchase 151,100,
242,500 and 167,896 shares, respectively, under the Plan were granted. Of the
options previously granted, 354,231 shares have expired, thereby making these
options available for future grants. As of December 31, 2000, 530,317 options
remained outstanding under this plan, with 300,887 shares available to be
granted at a future time.

1997 Stock Appreciation Rights Plan

On October 21, 1997, the board of directors approved a Stock Appreciation
Rights Plan (the SAR Plan). Under the SAR Plan, certain key employees have
been granted the right to receive cash equal to the excess of the fair market
value of a share of our common stock at the time of exercise, over the fair
market value of a share of our common stock at date of grant, times the number
of rights exercised. As of December 31, 2000, 40,250 SARs had been granted at
the then current market value of $26.675 with 25,850 remained outstanding. No
more than 20% of the shares may vest annually by beginning at date of grant.
The term of a SAR may vary, but shall not be less than one year or more than 10
years from the date of grant.

We record compensation expense equal to the appreciation of the fair market
value of the stock times the number of outstanding SARs. As of December 31,
2000, there had been no appreciation of our common stock over the fair market
value at date of grant. Therefore, compensation expense has been recorded only
for those rights which have been exercised.

Aggregate Stock Option Activity

We have adopted SFAS No. 123 for disclosure purposes. For SFAS No. 123
purposes, the fair value of each option grant has been estimated as of the date
of grant using the Black-Scholes option pricing model with the following
assumptions (weighted averages) for 2000, 1999 and 1998: risk-free interest
rate of 5.08%, 6.34% and 4.66%, respectively, expected life of seven years,
dividend rate of zero percent, and expected volatility of 41.1% for 2000, 24.0%
for 1999 and 70.1% for 1998. The approximate fair value of the stock options
granted in 2000, 1999, and 1998 is $1.3 million, $2.9 million and $3.4 million,
respectively, which would be amortized

71



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as compensation expense over the vesting period of the options. Options vest
over five years. Had compensation cost been determined consistent with SFAS
No. 123, utilizing the assumptions detailed above, our net income (loss) and
earnings (loss) per share, as reported, would have been the following pro forma
amounts ($ in thousands except per share data):

|                                    |             |  |      |        |      |  |      |        |  |  |   |         |  
|----------------------------------- | ----------- |  | ---- | ------ | ---- |  | ---- | ------ |  |  | - | ------- | -
|                                    |             |  | 2000 |        | 1999 |  | 1998
|                                    |             |  |      |        |      |  |     
|Net income (loss)                  
|                                   
|                                   
|                                   
|                                   
|                                    | As reported |  | $    | (4,598 | )    |  | $    | 10,692 |  |  | $ | (12,421 | )
|                                   
|                                   
|                                   
|                                   
|                                    | Pro forma   |  |      | (5,962 | )    |  |      | 9,452  |  |  |   | (13,176 | )
|                                   
|                                   
|                                   
|                                   
|                                   
|                                   
|                                   
|                                   
|                                   
|Net income (loss) per share-basic  
|                                   
|                                   
|                                   
|                                   
|                                    | As reported |  |      | (.46   | )    |  |      | .99    |  |  |   | (1.34   | )
|                                   
|                                   
|                                   
|                                   
|                                    | Proforma    |  |      | (.59   | )    |  |      | .88    |  |  |   | (1.42   | )
|                                   
|                                   
|                                   
|                                   
|                                   
|                                   
|                                   
|                                   
|                                   
|Net income (loss) per share-diluted
|                                   
|                                   
|                                   
|                                   
|                                    | As reported |  |      | (.46   | )    |  |      | .95    |  |  |   | (1.34   | )
|                                   
|                                   
|                                   
|                                   
|                                    | Pro forma   |  |      | (.59   | )    |  |      | .84    |  |  |   | (1.42   | )

Because the SFAS No. 123 method of accounting has not been applied to options
granted prior to January 1, 1995, the resulting pro forma compensation cost
might not be representative of that expected in future years. A summary of the
status of our stock option plans at December 31, 2000, 1999 and 1998, and for
the years then ended is presented in the table below:

|                    |                                         |  |        |          |          |  |          |       |          |  |        |          |          |  |          |       |  |  |  |         |   |  |   |       | 
|------------------- | --------------------------------------- |  | ------ | -------- | -------- |  | -------- | ----- | -------- |  | ------ | -------- | -------- |  | -------- | ----- |  |  |  | ------- | - |  | - | ----- | 
|                    |                                         |  | 2000   |          | 1999     |  | 1998    
|                    |                                         |  |        |          |          |  |         
|                    |                                         |  |        |          |          |  | Wtd Avg. |       |          |  |        |          | Wtd Avg. |  | Wtd Avg.
|                    |                                         |  | Shares |          | Ex Price |  | Shares   |       | Ex Price |  | Shares |          | Ex Price
|                    |                                         |  |        |          |          |  |          |       |          |  |        |          |         
|Fixed Options      
|                   
|                   
|                   
|                   
|                    | Outstanding beg. of year               |  |        | 539,557  |          |  | $        | 19.09 |          |  |        | 503,939  |          |  | $        | 20.15 |  |  |  | 407,995 |   |  | $ | 15.10 | 
|                   
|                   
|                   
|                   
|                    | Granted                                 |  |        | 221,100  |          |  |          | 12.11 |          |  |        | 267,500  |          |  |          | 14.73 |  |  |  | 167,896 |   |  |   | 28.58 | 
|                   
|                   
|                   
|                   
|                    | Exercised                               |  |        | (100     | )        |  |          | 10.88 |          |  |        | (119,595 | )        |  |          | 10.33 |  |  |  | (61,552 | ) |  |   | 9.65  | 
|                   
|                   
|                   
|                   
|                    | Forfeited/Expired                       |  |        | (115,240 | )        |  |          | 18.19 |          |  |        | (112,287 | )        |  |          | 22.79 |  |  |  | (10,400 | ) |  |   | 20.55 | 
|                    |                                         |  |        |          |          |  |          |       |          |  |        |          |          |  |          |       |  |  |  |        
|                    | Outstanding end of year                |  |        | 645,317  |          |  |          | 16.86 |          |  |        | 539,557  |          |  |          | 19.09 |  |  |  | 503,939 |   |  |   | 20.15 | 
|                    |                                         |  |        |          |          |  |          |       |          |  |        |          |          |  |          |       |  |  |  |        
|                    | Exercisable end of year                |  |        | 308,557  |          |  |          | 18.42 |          |  |        | 234,357  |          |  |          | 19.04 |  |  |  | 284,579 |   |  |   | 13.36 | 
|                   
|                   
|                   
|                   
|                    | Wtd. avg. fair value
of options granted |  |        |          |          |  |          | 5.78  |          |  |        |          |          |  |          | 10.93 |  |  |  |         |   |  |   | 20.04 | 
|                   
|                   
|                   
|                   
|Performance Options
|                   
|                   
|                   
|                   
|                    | Outstanding beg. of year               |  |        |         |          |  |          |      |          |  |        | 139,100  |          |  |          | 14.79 |  |  |  | 172,400 |   |  |   | 14.56 | 
|                   
|                   
|                   
|                   
|                    | Granted                                 |  |        |          |          |  |          |       |          |  |        |         |          |  |          |      |  |  |  |        |   |  |   |      | 
|                   
|                   
|                   
|                   
|                    | Exercised                               |  |        |          |          |  |          |       |          |  |        | (113,100 | )        |  |          | 13.63 |  |  |  | (16,500 | ) |  |   | 13.63 | 
|                   
|                   
|                   
|                   
|                    | Forfeited/Expired                       |  |        |          |          |  |          |       |          |  |        | (26,000  | )        |  |          | 19.85 |  |  |  | (16,800 | ) |  |   | 13.63 | 
|                    |                                         |  |        |          |          |  |          |       |          |  |        |          |          |  |          |       |  |  |  |         |   |  |   |      
|                    | Outstanding end of year                |  |        |          |          |  |          |       |          |  |        |         |          |  |          |      |  |  |  | 139,100 |   |  |   | 14.79 | 
|                    |                                         |  |        |          |          |  |          |       |          |  |        |          |          |  |          |       |  |  |  |         |   |  |   |      
|                    | Exercisable end of year                |  |        |          |          |  |          |       |          |  |        |         |          |  |          |      |  |  |  | 68,900  |   |  |   | 14.79 | 
|                   
|                   
|                   
|                   
|                    | Wtd. avg. fair value
of options granted |  |        |          |          |  |          |       |          |  |        |         |          |  |          |       |  |  |  |         |   |  |   |      | 

|                    |  |                     |         |                  |  |                  |      |             |  |                  |       |  |  |  |         |  |  |  |       | 
|------------------- |  | ------------------- | ------- | ---------------- |  | ---------------- | ---- | ----------- |  | ---------------- | ----- |  |  |  | ------- |  |  |  | ----- | 
|Options Outstanding |  | Options Exercisable
|                    |  |                    
|                    |  | Number              |         | Weighted-Average |  |                  |      |             |  | Number          
|Range of            |  | Outstanding         |         | Remaining        |  | Weighted-Average |      | Exercisable |  | Weighted-Average
|Exercise Prices     |  | at 12/31/00         |         | Contractual Life |  | Exercise Price   |      | at 12/31/00 |  | Exercise Price  
|                    |  |                     |         |                  |  |                  |      |             |  |                 
|$10.00  12.63      |  |                     | 216,150 |                  |  |                  | 8.86 |             |  |                  | 11.27 |  |  |  | 64,710  |  |  |  | 11.21 | 
|                   
|                   
|                   
|                   
|13.63  17.63       |  |                     | 273,627 |                  |  |                  | 7.65 |             |  |                  | 14.98 |  |  |  | 139,307 |  |  |  | 14.59 | 
|                   
|                   
|                   
|                   
|26.68  28.94       |  |                     | 155,540 |                  |  |                  | 7.26 |             |  |                  | 28.12 |  |  |  | 104,540 |  |  |  | 27.97 | 

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15. EARNINGS (LOSS) PER SHARE:

Net Income (Loss) Per Common and Common Equivalent Share

Diluted earnings (loss) per common and common equivalent shares have been
computed by dividing net income (loss) by the weighted average common and
common equivalent shares outstanding during the periods. The weighted average
common and common equivalent shares outstanding has been adjusted to include
the number of shares that would have been outstanding if the stock options had
been exercised, at the average market price for the period, with the proceeds
being used to buy shares from the market (i.e., the treasury stock method) and
the perpetual preferred convertible stock and the convertible subordinated
debentures had been converted to common stock at the earlier of the beginning
of the year or the issue date (i.e., the if-converted method). Basic earnings
(loss) per common share was computed by dividing net income (loss) less
dividends paid on preferred stock, by the weighted average number of shares of
common stock outstanding during the year. During 2000, there were 645,317
stock options, 270,000 shares related to convertible subordinated debt and
750,000 shares related to convertible preferred stock, which were antidilutive.
During 1999, there were 298,140 stock options and 270,000 shares related to
convertible subordinated debt, which were antidilutive. During 1998, there
were 643,039 stock options and 750,000 shares related to convertible preferred
stock, which were antidilutive.

The table below reconciles the calculation of diluted and basic earnings per
share for 1999 ($ in thousands, except per share data):

|                           |                                                                           |   |        |     |             |  |            |         |          |   |      |      | 
|-------------------------- | ------------------------------------------------------------------------- | - | ------ | --- | ----------- |  | ---------- | ------- | -------- | - | ---- | ---- | 
|                           |                                                                           |   | 1999  
|                           |                                                                           |   |       
|                           |                                                                           |   |        |     |             |  | Weighted   |         | Earnings
|                           |                                                                           |   | Net    |     | Shares      |  | Per       
|                           |                                                                           |   | Income |     | Outstanding |  | Share     
|                           |                                                                           |   |        |     |             |  |           
|Net Income                 |                                                                           | $ | 10,427 |     |             |  | 10,484,650 |        
|                          
|                          
|                          
|                          
|                           | Basic earnings per share                                                  |   |        |     |             |  |            |         |          |   | $    | 0.99 | 
|                          
|                          
|                          
|                          
|                           | Options exercised during the
period incremental effect
prior to exercise |   |        |    |             |  |            | 23,676  |         
|                          
|                          
|                          
|                          
|                           | Options outstanding at end
of period                                      |   |        |    |             |  |            | 41,576  |         
|                          
|                          
|                          
|                          
|                           | Convertible perpetual preferred
stock                                     |   |        | 265 |             |  |            | 750,000 |          |   |      |     | 
|                           |                                                                           |   |        |     |             |  |            |         |          |   |      |     
|Diluted earnings per share |                                                                           | $ | 10,692 |     |             |  | 11,299,902 |         |          | $ | 0.95 |     
|                           |                                                                           |   |        |     |             |  |            |         |          |   |      |     

16. REGULATORY CAPITAL REQUIREMENTS:

We are required to comply with the capital adequacy standards established by
the Federal Reserve and the FDIC. There are three basic measures of capital
adequacy that have been promulgated by the Federal Reserve and FDIC, two
risk-based measures and a leverage measure. All applicable capital standards
must be satisfied for a bank holding company to be considered in compliance.

The minimum guidelines for the ratio (Risk-Based Capital Ratio) of total
capital (Total Capital) to risk-weighted assets (including certain
off-balance-sheet items, such as standby letters of credit) is 8.0%. At least
half of Total Capital (i.e., 4.0% of risk-weighted assets) must comprise common
stock, minority interests in the equity accounts of consolidated subsidiaries,
noncumulative perpetual preferred convertible stock, and a limited amount of
cumulative perpetual preferred convertible stock, less goodwill and certain
other intangible assets (Tier 1 Capital). The remainder may consist of
subordinated debt, other preferred stock, and a limited amount of loan loss
reserves (Tier 2 Capital). In addition, the Federal Reserve has established
minimum leverage ratio guidelines for bank holding companies. These guidelines
provide for a minimum ratio (the Leverage Ratio) of Tier 1 Capital to average
assets, less goodwill and certain other intangible assets, of 3.0%

73



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for banks
that meet certain specified criteria, including having the highest regulatory
rating. All other bank holding companies generally are required to maintain a
Leverage Ratio of at least 3.0%, plus an additional cushion of 100 to 200 basis
points. The guidelines also provide that bank holding companies experiencing
internal growth or making acquisitions will be expected to maintain strong
capital positions substantially above the minimum supervisory levels without
significant reliance on intangible assets. Furthermore, the Federal Reserve
has indicated that it will consider a tangible Tier I Capital leverage ratio
(deducting all intangibles) and other indicators of capital strength in
evaluating proposals for expansion or new activities.

Failure to meet capital guidelines could subject us to a variety of enforcement
remedies, including issuance of a capital directive, the termination of deposit
insurance by the FDIC, a prohibition on the taking of brokered deposits, and
certain other restrictions on our business. Substantial additional
restrictions can be imposed upon FDIC-insured depository institutions that fail
to meet applicable capital requirements under the federal prompt corrective
action regulations.

As of December 31, 2000 and 1999, we were considered well capitalized under
the federal banking agencies for prompt corrective action regulations. The
table which follows sets forth the amounts of capital and capital ratios as of
December 31, 2000 and 1999, and the applicable regulatory minimums ($ in
thousands):

[Balance of page intentionally left blank]

74



---



|                                           |                     |                                                    |  |         |         |       |  |        |       |       |  |   |         |  |  |  |       |  
|------------------------------------------ | ------------------- | -------------------------------------------------- |  | ------- | ------- | ----- |  | ------ | ----- | ----- |  | - | ------- |  |  |  | ----- | -
|                                           |                     |                                                    |  | Company |         | Bank 
|                                           |                     |                                                    |  |         |         |      
|                                           |                     |                                                    |  | Amount  |         | Ratio |  | Amount |       | Ratio
|                                           |                     |                                                    |  |         |         |       |  |        |       |      
|As of December 31, 2000:                  
|                                          
|                                          
|                                          
|                                          
|                                           | Risk-Based Capital:
|                                          
|                                          
|                                          
|                                          
|                                           |                     | Tier 1 Capital                                    
|                                          
|                                          
|                                          
|                                          
|                                           |                     | Actual                                             |  | $       | 151,969 |       |  |        | 10.27 | %     |  | $ | 172,967 |  |  |  | 11.69 | %
|                                          
|                                          
|                                          
|                                          
|                                           |                     | Minimum required to be Adequately Capitalized    |  |         | 59,216  |       |  |        | 4.00  |       |  |   | 59,161  |  |  |  | 4.00  |  
|                                          
|                                          
|                                          
|                                          
|                                           |                     | Excess over minimum to be Adequately Capitalized |  |         | 92,753  |       |  |        | 6.27  |       |  |   | 113,806 |  |  |  | 7.69  |  
|                                          
|                                          
|                                          
|                                          
|                                           |                     | To be Well Capitalized                           |  |         | N/A     |       |  |        | N/A   |       |  |   | 88,742  |  |  |  | 6.00  |  
|                                          
|                                          
|                                          
|                                          
|                                           |                     | Excess over Well Capitalized requirements        |  |         | N/A     |       |  |        | N/A   |       |  |   | 84,225  |  |  |  | 5.69  |  
|                                          
|                                          
|                                          
|                                          
|                                           |                     |                                                   
|                                          
|                                          
|                                          
|                                          
|                                           |                     | Total Capital                                     
|                                          
|                                          
|                                          
|                                          
|                                           |                     | Actual                                             |  |         | 187,935 |       |  |        | 12.69 |       |  |   | 191,455 |  |  |  | 12.94 |  
|                                          
|                                          
|                                          
|                                          
|                                           |                     | Minimum required to be Adequately Capitalized    |  |         | 118,431 |       |  |        | 8.00  |       |  |   | 118,323 |  |  |  | 8.00  |  
|                                          
|                                          
|                                          
|                                          
|                                           |                     | Excess over minimum to be Adequately Capitalized |  |         | 69,504  |       |  |        | 4.69  |       |  |   | 73,132  |  |  |  | 4.94  |  
|                                          
|                                          
|                                          
|                                          
|                                           |                     | To be Well Capitalized                           |  |         | N/A     |       |  |        | N/A   |       |  |   | 147,903 |  |  |  | 10.00 |  
|                                          
|                                          
|                                          
|                                          
|                                           |                     | Excess over/under Well Capitalized requirements  |  |         | N/A     |       |  |        | N/A   |       |  |   | 43,552  |  |  |  | 2.94  |  
|                                          
|                                          
|                                          
|                                          
|                                           |                     |                                                   
|                                          
|                                          
|                                          
|                                          
|Tier 1 Capital to Total Assets (Leverage):
|                                          
|                                          
|                                          
|                                          
|                                           |                     | Actual                                             |  |         | 151,969 |       |  |        | 6.30  |       |  |   | 172,967 |  |  |  | 7.18  |  
|                                          
|                                          
|                                          
|                                          
|                                           |                     | Minimum required to be Adequately Capitalized    |  |         | 96,473  |       |  |        | 4.00  |       |  |   | 96,311  |  |  |  | 4.00  |  
|                                          
|                                          
|                                          
|                                          
|                                           |                     | Excess over minimum to be Adequately Capitalized |  |         | 55,496  |       |  |        | 2.30  |       |  |   | 76,656  |  |  |  | 3.18  |  
|                                          
|                                          
|                                          
|                                          
|                                           |                     | To be Well Capitalized                           |  |         | N/A     |       |  |        | N/A   |       |  |   | 120,389 |  |  |  | 5.00  |  
|                                          
|                                          
|                                          
|                                          
|                                           |                     | Excess over Well Capitalized requirements        |  |         | N/A     |       |  |        | N/A   |       |  |   | 52,578  |  |  |  | 2.18  |  
|                                          
|                                          
|                                          
|                                          
|                                           |                     |                                                   
|                                          
|                                          
|                                          
|                                          
|As of December 31, 1999:                  
|                                          
|                                          
|                                          
|                                          
|                                           | Risk-Based Capital:
|                                          
|                                          
|                                          
|                                          
|                                           |                     | Tier 1 Capital                                    
|                                          
|                                          
|                                          
|                                          
|                                           |                     | Actual                                             |  | $       | 149,560 |       |  |        | 9.17  | %     |  | $ | 168,108 |  |  |  | 10.33 | %
|                                          
|                                          
|                                          
|                                          
|                                           |                     | Minimum required to be Adequately Capitalized    |  |         | 65,234  |       |  |        | 4.00  |       |  |   | 65,064  |  |  |  | 4.00  |  
|                                          
|                                          
|                                          
|                                          
|                                           |                     | Excess over minimum to be Adequately Capitalized |  |         | 84,326  |       |  |        | 5.17  |       |  |   | 103,044 |  |  |  | 6.33  |  
|                                          
|                                          
|                                          
|                                          
|                                           |                     | To be Well Capitalized                           |  |         | N/A     |       |  |        | N/A   |       |  |   | 97,596  |  |  |  | 6.00  |  
|                                          
|                                          
|                                          
|                                          
|                                           |                     | Excess over Well Capitalized requirements        |  |         | N/A     |       |  |        | N/A   |       |  |   | 70,512  |  |  |  | 4.33  |  
|                                          
|                                          
|                                          
|                                          
|                                           |                     |                                                   
|                                          
|                                          
|                                          
|                                          
|                                           |                     | Total Capital                                     
|                                          
|                                          
|                                          
|                                          
|                                           |                     | Actual                                             |  |         | 188,093 |       |  |        | 11.53 |       |  |   | 189,154 |  |  |  | 11.63 |  
|                                          
|                                          
|                                          
|                                          
|                                           |                     | Minimum required to be Adequately Capitalized    |  |         | 130,469 |       |  |        | 8.00  |       |  |   | 130,128 |  |  |  | 8.00  |  
|                                          
|                                          
|                                          
|                                          
|                                           |                     | Excess over minimum to be Adequately Capitalized |  |         | 57,624  |       |  |        | 3.53  |       |  |   | 59,026  |  |  |  | 3.63  |  
|                                          
|                                          
|                                          
|                                          
|                                           |                     | To be Well Capitalized                           |  |         | N/A     |       |  |        | N/A   |       |  |   | 162,660 |  |  |  | 10.00 |  
|                                          
|                                          
|                                          
|                                          
|                                           |                     | Excess over Well Capitalized requirements        |  |         | N/A     |       |  |        | N/A   |       |  |   | 26,494  |  |  |  | 1.63  |  
|                                          
|                                          
|                                          
|                                          
|                                           |                     |                                                   
|                                          
|                                          
|                                          
|                                          
|Tier 1 Capital to Total Assets (Leverage):
|                                          
|                                          
|                                          
|                                          
|                                           |                     | Actual                                             |  |         | 149,560 |       |  |        | 6.02  |       |  |   | 168,108 |  |  |  | 6.78  |  
|                                          
|                                          
|                                          
|                                          
|                                           |                     | Minimum required to be Adequately Capitalized    |  |         | 99,298  |       |  |        | 4.00  |       |  |   | 99,136  |  |  |  | 4.00  |  
|                                          
|                                          
|                                          
|                                          
|                                           |                     | Excess over minimum to be Adequately Capitalized |  |         | 50,262  |       |  |        | 2.02  |       |  |   | 68,972  |  |  |  | 2.78  |  
|                                          
|                                          
|                                          
|                                          
|                                           |                     | To be Well Capitalized                           |  |         | N/A     |       |  |        | N/A   |       |  |   | 123,920 |  |  |  | 5.00  |  
|                                          
|                                          
|                                          
|                                          
|                                           |                     | Excess over Well Capitalized requirements        |  |         | N/A     |       |  |        | N/A   |       |  |   | 44,188  |  |  |  | 1.78  |  

75



---



17. RELATED PARTY TRANSACTIONS:

Mr. William R. Hough, is chairman of the board, a director, and our largest
shareholder. Mr. Hough is also President and the controlling shareholder of
William R. Hough & Co. (WRHC), a NASD-member investment-banking firm. During
1999, we entered into an agreement with WRHC whereby they would act as our
agent in open-market purchases of securities. WRHC is compensated under that
agreement on a commission basis. During 2000 and 1999, we placed $41.4 million
and $241.3 million, respectively, of forward sales on mortgage-backed
securities through WRHC. We also periodically purchase securities under
agreement to repurchase at a rate based on the prevailing federal funds rate
and one-eighth of one percent, per an agreement entered into on August 15,
1995.

On May 17, 2000, we entered into a loan agreement with Mr. Hough, individually,
to borrow up to $2.0 million on an unsecured, revolving line of credit basis.
The full amount of that line was drawn in the second quarter of 2000. On
September 14, 2000, an additional loan agreement was entered into with Mr.
Hough to borrow up to $1.5 million. The full amount of that line was drawn in
the third quarter of 2000. The proceeds were used for holding company debt
service. Interest on these loans is at a variable rate, changing daily, and
equal to the Citibank, N.A., New York Base Rate (the Index) plus .50%. The
rate at December 31, 2000 was 10.0% per annum. The loans have been amended to
extend repayment of all outstanding principal on October 1, 2002. In addition,
we are obligated to pay regular monthly payments of all accrued unpaid interest
due. The repayment of principal and interest on these loans is subordinate to
the payment of all principal and interest on the Senior Debt.

In September 1999, WRHC acted as sales agent for a private placement to
accredited investors of $15.0 million of our 7.0% convertible subordinated
debentures (the Debentures) maturing on October 1, 2014. WRHC was paid fees
in an amount equal to $215,000 and were reimbursed for their out-of-pocket
expenses.

In May 1998, WRHC acted as co-underwriters for an offering of 2.6 million
shares of our common stock and as such was entitled to receive fees in an
amount equal to $1.5 million. In addition, during 1998, WRHC was engaged to
act as one of the underwriters in connection with a private placement offering
of approximately $240.0 million in securities backed by High LTV Loans and
received $550,761 in placement agent fees in the transaction. We also
reimbursed WRHC for out-of-pocket expenses. WRHC was not reimbursed for
hedging costs and certain other syndication expenses associated with the
transaction.

WRHC offers sales of insurance and mutual fund products and investment advisory
services on our premises. We are paid 50% of the net profits earned from sales
of investment products on our premises. Fee income earned from this
relationship was $250,400 and $58,200 during 2000 and 1999, respectively.

Certain directors and executive officers, members of their immediate families,
and entities with which such persons are associated are customers of ours. As
such, they had transactions in the ordinary course of business with us. All
loans and commitments to lend included in those transactions were made in the
ordinary course of business, upon substantially the same terms. Features
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and, in our opinion, have not
involved more than the normal risk of collectibility or presented other
unfavorable features.

76



---



18. BANK HOLDING COMPANY FINANCIAL STATEMENTS:

Condensed financial statements at December 31, 2000, are presented below.
Amounts shown as investment in the wholly owned subsidiaries and equity in
earnings of subsidiaries are eliminated in consolidation.

Republic Bancshares, Inc.
Parent-Only Condensed Balance Sheets
($ in thousands)

|                     |                                                                           |              |                                          |         |                    |         |      |         |         |         | 
|-------------------- | ------------------------------------------------------------------------- | ------------ | ---------------------------------------- | ------- | ------------------ | ------- | ---- | ------- | ------- | ------- | 
|                     |                                                                           |              |                                          |         | As of December 31,
|                     |                                                                           |              |                                          |         |                   
|                     |                                                                           |              |                                          |         | 2000               |         | 1999
|                     |                                                                           |              |                                          |         |                    |         |     
|Assets              
|                    
|                    
|                    
|                    
|                     | Cash                                                                      |              | $                                        | 1,078   |                    |         | $    | 4,123   |        
|                    
|                    
|                    
|                    
|                     | Investment in wholly-owned subsidiaries                                   |              |                                          | 223,444 |                    |         |      | 218,994 |        
|                    
|                    
|                    
|                    
|                     | Other assets                                                              |              |                                          | 4,694   |                    |         |      | 2,805   |        
|                     |                                                                           |              |                                          |         |                    |         |      |         |        
|                     |                                                                           | Total assets |                                          | $       | 229,216            |         |      | $       | 225,922 |        
|                     |                                                                           |              |                                          |         |                    |         |      |         |        
|Liabilities         
|                    
|                    
|                    
|                    
|                     | Holding company senior debt                                               |              | $                                        | 6,833   |                    |         | $    | 9,167   |        
|                    
|                    
|                    
|                    
|                     | Convertible subordinated debt                                             |              |                                          | 14,712  |                    |         |      | 14,684  |        
|                    
|                    
|                    
|                    
|                     | Term subordinated debt and unsecured notes                                |              |                                          | 6,250   |                    |         |      | 2,750   |        
|                    
|                    
|                    
|                    
|                     | Junior subordinated debt to subsidiary                                    |              |                                          | 28,750  |                    |         |      | 28,750  |        
|                    
|                    
|                    
|                    
|                     | Accrued interest on debt                                                  |              |                                          | 330     |                    |         |      | 326     |        
|                     |                                                                           |              |                                          |         |                    |         |      |         |        
|                     |                                                                           |              | Total liabilities                        |         |                    | 56,875  |      |         |         | 55,677  | 
|                    
|                    
|                    
|                    
|                    
|                    
|                    
|                    
|                    
|Stockholders Equity
|                    
|                    
|                    
|                    
|                     | Perpetual preferred convertible stock                                     |              |                                          | 1,500   |                    |         |      | 1,500   |        
|                    
|                    
|                    
|                    
|                     | Common stock                                                              |              |                                          | 21,112  |                    |         |      | 21,112  |        
|                    
|                    
|                    
|                    
|                     | Capital surplus                                                           |              |                                          | 128,735 |                    |         |      | 128,780 |        
|                    
|                    
|                    
|                    
|                     | Retained earnings                                                         |              |                                          | 21,669  |                    |         |      | 26,530  |        
|                    
|                    
|                    
|                    
|                     | Net unrealized losses on available
for sale securities, net of tax effect |              |                                          | (675    | )                  |         |      | (7,677  | )      
|                     |                                                                           |              |                                          |         |                    |         |      |         |        
|                     | Total stockholders equity                                                |              |                                          | 172,341 |                    |         |      | 170,245 |        
|                     |                                                                           |              |                                          |         |                    |         |      |         |        
|                     |                                                                           |              | Total liabilities & stockholders equity |         | $                  | 229,216 |      |         | $       | 225,922 | 
|                     |                                                                           |              |                                          |         |                    |         |      |         |        

Republic Bancshares, Inc.
Parent-Only Condensed Statements of Operations
($ in thousands)

|                                                        |                   |   |                                  |        |      |   |        |        |  |   |         |         |  
|------------------------------------------------------- | ----------------- | - | -------------------------------- | ------ | ---- | - | ------ | ------ |  | - | ------- | ------- | -
|                                                        |                   |   | For the Years Ended December 31,
|                                                        |                   |   |                                 
|                                                        |                   |   | 2000                             |        | 1999 |   | 1998  
|                                                        |                   |   |                                  |        |      |   |       
|Dividends from bank                                     |                   | $ | 854                              |        |      | $ | 7,200  |        |  | $ | 2,499   |        
|                                                       
|                                                       
|                                                       
|                                                       
|Interest on deposits                                    |                   |   |                                 |        |      |   | 13     |        |  |   |        |        
|                                                       
|                                                       
|                                                       
|                                                       
|Interest expense on holding company debt                |                   |   | (2,198                           | )      |      |   | (2,276 | )      |  |   | (507    | )      
|                                                       
|                                                       
|                                                       
|                                                       
|Interest expense on borrowings from subsidiary          |                   |   | (2,616                           | )      |      |   | (2,616 | )      |  |   | (2,616  | )      
|                                                       
|                                                       
|                                                       
|                                                       
|Equity in undistributed net income (loss)
of subsidiary |                   |   | (2,512                           | )      |      |   | 6,562  |        |  |   | (13,004 | )      
|                                                       
|                                                       
|                                                       
|                                                       
|Other expense                                           |                   |   | (11                              | )      |      |   | (3     | )      |  |   |        |        
|                                                       
|                                                       
|                                                       
|                                                       
|Income tax benefit                                      |                   |   | 1,885                            |        |      |   | 1,812  |        |  |   | 1,207   |        
|                                                        |                   |   |                                  |        |      |   |        |        |  |   |         |        
|                                                        | Net income (loss) |   | $                                | (4,598 | )    |   | $      | 10,692 |  |   | $       | (12,421 | )
|                                                        |                   |   |                                  |        |      |   |        |        |  |   |         |        

77



---



Republic Bancshares, Inc.
Parent-Only Condensed Cash Flow Statements
($ in thousands)

|                                                     |                                                                                                    |                                                     |        |                                  |     |      |        |         |        |   |         |          |          |  
|---------------------------------------------------- | -------------------------------------------------------------------------------------------------- | --------------------------------------------------- | ------ | -------------------------------- | --- | ---- | ------ | ------- | ------ | - | ------- | -------- | -------- | -
|                                                     |                                                                                                    |                                                     |        | For the Years Ended December 31,
|                                                     |                                                                                                    |                                                     |        |                                 
|                                                     |                                                                                                    |                                                     |        | 2000                             |     | 1999 |        | 1998   
|                                                     |                                                                                                    |                                                     |        |                                  |     |      |        |        
|Operating Activities:                               
|                                                    
|                                                    
|                                                    
|                                                    
|Net income (loss)                                    |                                                                                                    | $                                                   | (4,598 | )                                |     | $    | 10,692 |         |        | $ | (12,421 | )       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Equity in undistributed net income (loss) of subsidiary                                            |                                                     |        | 2,512                            |     |      |        | (6,562  | )      |   |         | 13,004   |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Expense on performance options                                                                     |                                                     |        | (46                              | )   |      |        | 1,103   |        |   |         | 551      |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Amortization of issuance costs                                                                     |                                                     |        | 28                               |     |      |        | 3       |        |   |         |         |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Net increase in other assets                                                                       |                                                     |        | (1,889                           | )   |      |        | (1,598  | )      |   |         | (1,207   | )       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Net increase in other liabilities                                                                  |                                                     |        | 4                                |     |      |        | 288     |        |   |         | 12       |         
|                                                     |                                                                                                    |                                                     |        |                                  |     |      |        |         |        |   |         |         
|Net cash provided by (used in) operating activities  |                                                                                                    |                                                     | (3,989 | )                                |     |      | 3,926  |         |        |   | (61     | )       
|                                                     |                                                                                                    |                                                     |        |                                  |     |      |        |         |        |   |         |         
|Investment Activities:                              
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Equity investment in banking subsidiary                                                            |                                                     |        | 41                               |     |      |        | (1,251  | )      |   |         | (104,164 | )       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Return of investment from savings bank                                                             |                                                     |        |                                 |     |      |        | 3,127   |        |   |         |         |         
|                                                     |                                                                                                    |                                                     |        |                                  |     |      |        |         |        |   |         |         
|                                                     |                                                                                                    | Net cash provided by (used in) investing activities |        |                                  | 41  |      |        |         | 1,876  |   |         |          | (104,164 | )
|                                                     |                                                                                                    |                                                     |        |                                  |     |      |        |         |        |   |         |         
|Financing Activities:                               
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Proceeds from issuance of common stock                                                             |                                                     |        |                                 |     |      |        |        |        |   |         | 72,882   |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Proceeds from issuance of holding company debt                                                     |                                                     |        | 4,500                            |     |      |        | 10,531  |        |   |         | 32,000   |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Repayment of holding company debt                                                                  |                                                     |        | (3,334                           | )   |      |        | (15,934 | )      |   |         |         |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Proceeds from exercise of stock options                                                            |                                                     |        | 1                                |     |      |        | 2,779   |        |   |         | 818      |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Dividend on perpetual preferred convertible stock                                                  |                                                     |        | (264                             | )   |      |        | (265    | )      |   |         | (265     | )       
|                                                     |                                                                                                    |                                                     |        |                                  |     |      |        |         |        |   |         |         
|                                                     |                                                                                                    | Net cash provided by (used in) financing activities |        |                                  | 903 |      |        |         | (2,889 | ) |         |          | 105,435  |  
|                                                     |                                                                                                    |                                                     |        |                                  |     |      |        |         |        |   |         |         
|NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |                                                                                                    |                                                     | (3,045 | )                                |     |      | 2,913  |         |        |   | 1,210   |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Cash and cash equivalents, beginning of year                                                       |                                                     |        | 4,123                            |     |      |        | 1,210   |        |   |         |         |         
|                                                     |                                                                                                    |                                                     |        |                                  |     |      |        |         |        |   |         |         
|                                                     | Cash and cash equivalents, end of year                                                             |                                                     | $      | 1,078                            |     |      | $      | 4,123   |        |   | $       | 1,210    |         
|                                                     |                                                                                                    |                                                     |        |                                  |     |      |        |         |        |   |         |         

78



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19. PRIOR YEAR BUSINESS SEGMENT INFORMATION:

As a result of the restructuring of our mortgage banking operation in the
fourth quarter of 1998, that operation represented an insubstantial portion of
our overall business activities during 2000 and 1999 and has ceased to be a
reportable business segment.

Our operations, through December 31, 1998, were divided into two business
segments; commercial banking and mortgage banking. Commercial banking
activities included our lending for portfolio purposes, deposit gathering
through the retail branch network, investment, and liquidity management.
Mortgage banking activities, which began in 1996, operated through a separate
division, included originating and purchasing mortgage loans for sale as well
as selling those loans. We provided support for our mortgage banking division
in areas such as secondary marketing and data processing. The following are
business segment results of operation for the year ended December 31, 1998. We
have elected to report our business segments before non-operating items and
without allocation of income taxes and minority interests.

Business Segment Data
Year Ended December 31, 1998
($ in thousands)

|                                                                                 |                              |                      |         |            |        |          |         |         |       |   |         |           |        | 
|-------------------------------------------------------------------------------- | ---------------------------- | -------------------- | ------- | ---------- | ------ | -------- | ------- | ------- | ----- | - | ------- | --------- | ------ | 
|                                                                                 |                              |                      |         | 1998      
|                                                                                 |                              |                      |         |           
|                                                                                 |                              |                      |         | Commercial |        | Mortgage |         | Company
|                                                                                 |                              |                      |         | Banking    |        | Banking  |         | Total  
|                                                                                 |                              |                      |         |            |        |          |         |        
|Assets:                                                                         
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Total assets (at period-end) |                      | $       | 2,320,941  |        |          | $       | 184,176 |       |   | $       | 2,505,117 |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 |                              | Nonperforming assets |         |            | 36,301 |          |         |         | 6,484 |   |         |           | 42,785 | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Operating Data:                                                                 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Interest income                                                                  |                              |                      | 141,554 |            |        |          | 31,239  |         |       |   | 172,793 |          
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Interest expense                                                                 |                              |                      | 71,677  |            |        |          | 17,932  |         |       |   | 89,609  |          
|                                                                                 |                              |                      |         |            |        |          |         |         |       |   |         |          
|Net interest income                                                              |                              |                      | 69,877  |            |        |          | 13,307  |         |       |   | 83,184  |          
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Loan loss provision (recurring)                                                  |                              |                      | 4,266   |            |        |          |        |         |       |   | 4,266   |          
|                                                                                 |                              |                      |         |            |        |          |         |         |       |   |         |          
|Net interest income after loan loss provision                                    |                              |                      | 65,611  |            |        |          | 13,307  |         |       |   | 78,918  |          
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Noninterest income                                                               |                              |                      | 14,905  |            |        |          | 41,252  |         |       |   | 56,157  |          
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|General and administrative (G & A) expenses                                      |                              |                      | 59,447  |            |        |          | 69,570  |         |       |   | 129,017 |          
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Other noninterest (income) expense                                               |                              |                      | (40     | )          |        |          |        |         |       |   | (40     | )        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Amort. of goodwill & premium on deposits                                         |                              |                      | 1,930   |            |        |          |        |         |       |   | 1,930   |          
|                                                                                 |                              |                      |         |            |        |          |         |         |       |   |         |          
|Net income (loss) before non-operating items, income taxes
and minority interest |                              | $                    | 19,179  |            |        | $        | (15,011 | )       |       | $ | 4,168   |          
|                                                                                 |                              |                      |         |            |        |          |         |        
|Non-operating items:                                                            
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Loan loss provision on loans transferred to portfolio                            |                              |                      |         |            |        |          |         |         |       |   | (9,995  | )        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Merger/acquisition expenses                                                      |                              |                      |         |            |        |          |         |         |       |   | (3,233  | )        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Restructuring cost                                                               |                              |                      |         |            |        |          |         |         |       |   | (6,673  | )        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Provision for losses on ORE                                                      |                              |                      |         |            |        |          |         |         |       |   | (1,603  | )        
|                                                                                 |                              |                      |         |            |        |          |         |         |       |   |         |          
|Net (loss) income before income taxes and minority interest                      |                              |                      |         |            |        |          |         |         |       |   | (17,336 | )        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Income tax benefit (expense)                                                     |                              |                      |         |            |        |          |         |         |       |   | 6,602   |          
|                                                                                 |                              |                      |         |            |        |          |         |         |       |   |         |          
|Net (loss) income before minority interests                                      |                              |                      |         |            |        |          |         |         |       |   | (10,734 | )        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Minority interest in income from subsidiary trust                                |                              |                      |         |            |        |          |         |         |       |   | (1,687  | )        
|                                                                                 |                              |                      |         |            |        |          |         |         |       |   |         |          
|Net (loss) income                                                                |                              |                      |         |            |        |          |         |         |       | $ | (12,421 | )        
|                                                                                 |                              |                      |         |            |        |          |         |         |       |   |         |          

79



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20. RESTRUCTURING COSTS AND OTHER RELATED CHARGES:

In the fourth quarter of 1998, we significantly reduced the size and scope of
our mortgage banking activities. We ceased originating High LTV Loans and
substantially reduced originations of nonconforming first mortgage loans. We
also closed our out-of-state lending offices and ceased all telemarketing
efforts that were the source of the majority of the loan originations from our
mortgage-banking unit.

In connection with this reorganization of mortgage banking activities, a
restructuring charge of approximately $6.7 million was recorded at December 31,
1998, which included severance benefits payable to mortgage banking employees
whose positions were eliminated, outplacement services for those employees,
write-downs for abandoned assets, costs related to the consolidation of
facilities and legal costs directly related to the restructuring. In addition,
an $818,000 charge was recorded for legal and other costs related to the
reorganization but not includable in the restructuring charge. We have
completed the restructuring process of the mortgage-banking unit.

Expenses charged against the restructuring accrual for the year ended December
31, 1999, are as follows:

|                             |                             |   |       |        |  
|---------------------------- | --------------------------- | - | ----- | ------ | -
|Balance at December 31, 1998 |                             | $ | 6,673 |       
|                            
|                            
|                            
|                            
|Deductions:                 
|                            
|                            
|                            
|                            
|                             | Severance and benefits      |   |       | (4,274 | )
|                            
|                            
|                            
|                            
|                             | Outplacement costs          |   |       | (200   | )
|                            
|                            
|                            
|                            
|                             | Abandonment of assets       |   |       | (614   | )
|                            
|                            
|                            
|                            
|                             | Consolidation of facilities |   |       | (1,335 | )
|                            
|                            
|                            
|                            
|                             | Legal costs                 |   |       | (250   | )
|                             |                             |   |       |       
|Balance at December 31, 1999 |                             | $ |      |       
|                             |                             |   |       |       

[Balance of page intentionally left blank]

80



---



SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, we have duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



| | REPUBLIC BANCSHARES, INC.
| | -------------------------



| | By:/s/ William R. Klich
              William R. Klich
President and Chief Executive Officer
| | --------------------------------------------------------------------------------------------



| | Date: March 2, 2001
| | -------------------

81



---



Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.

|                                           |  |               |  |                                                                     
|------------------------------------------ |  | ------------- |  | --------------------------------------------------------------------
|SIGNATURE                                  |  | DATE          |  | TITLE                                                               
|                                           |  |               |  |                                                                     
|/s/ William R. Klich
William R. Klich      |  | March 2, 2001 |  | President, and Chief Executive Officer
(principal executive officer)
|                                          
|/s/William R. Falzone
William R. Falzone   |  | March 2, 2001 |  | Treasurer (principal financial and
accounting officer)              
|                                          
|/s/Alfred T. May
Alfred T. May             |  | March 2, 2001 |  | Director                                                            
|                                          
|/s/Marla M. Hough
Marla M. Hough           |  | March 2, 2001 |  | Director                                                            
|                                          
|/s/William R. Hough
William R. Hough       |  | March 2, 2001 |  | Director                                                            
|                                          
|/s/William C. Ballard
William C. Ballard   |  | March 2, 2001 |  | Director                                                            
|                                          
|/s/William J. Morrison
William J. Morrison |  | March 2, 2001 |  | Director                                                            
|                                          
|/s/Charles J. Thayer
Charles J. Thayer     |  | March 2, 2001 |  | Director                                                            

82



---



INDEX TO EXHIBITS

|     |  |                                                    
|---- |  | ---------------------------------------------------
|23.0 |  | Consent of Independent Certified Public Accountants

83